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16
February 2018
 |
FICCI
(The Total Investment & Insurance Solutions)
Two
days after the USD1.8 billion fraud in Punjab National Bank (PNB) was disclose,
industry chambers on Friday condemned the incident criticising the functioning
of public sector banks.
"Alleged
fraudulent transactions worth Rs 11,300 crore from a single branch of the
Punjab National Bank with the connivance of the junior official(s) shows how
vulnerable the Indian banks, especially those in the public sector, have
become, with a dangerous potential contagion in the country's financial
system," a statement by Assocham said.
The
Federation of Indian Chambers of Commerce and Industry (FICCI) condemned the
illegal and unethical business practices adopted in the recent PSU Bank fraud
case and commends the speed with which the government agencies including
Enforcement Directorate, Central Bureau of Investigation and other agencies
have moved to take the investigation forward.
Fraudsters
should be expeditiously punished in accordance with the law, the chamber said.
FICCI
also recommended that in order to strengthen systemic and others risk
management systems within the banking ecosystem, a thorough root cause analysis
be done to plug the gaps and ensure there is no repeat of any wrongdoing that
impacts the rightful functioning of any banking institution while discharging
its duties to its customers and stakeholders.
"FICCI
defends the freedom of business enterprise but does not support illegal and
unethical business practices," said Rashesh Shah, President, FICCI.
"The
fact that an officer of the level of a deputy manager, as is being reported in
the media, could single handed wreck not only the country's second largest PSU
bank but also several other lenders shows how the risk management system is
lacking in these entities and how a chain of command system was not there or
was not followed," said D S Rawat, Secretary General, ASSOCHAM.
He
said with growing size of the Indian economy, the size of the banks and other
financial institutions have also become large enough to leave a huge contagion,
in case things go wrong.
"The
PNB incident should open our eyes to the malaise and a huge gap that exists in
building a foolproof risk detection and management. Ironically, even the
regulator, which is the RBI, could not detect the problem well in time. After
all, the RBI inspection is considered a routine affair in the bank
branches," Rawat added.
He
said "the scandal" has broken at a worse time for the banks which are
battling a humongous problem of the non-performing assets.
"The
PNB incident should not be allowed to shake confidence of depositors in the
banking system. Such incidents would also make the public more apprehensive
about the impending FRDI Bill," he said.The Total Investment & Insurance Solutions
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