Ex-RBI governor Reddy slams government over fraud at PNB

Former RBI governor Y V Reddy has slammed the government for the multi-crore fraud at state- run Punjab National Bank (PNB) and said as the owner of public sector lenders, it is answerable to taxpayer losses rising out of such financial scams.

In February this year, PNB detected a over Rs 13,000- crore fraud allegedly involving diamantaire Nirav Modi and his uncle Mehul Choksi, a billionaire jeweller, at one of its branches in Mumbai.

"A big fraud has come to light in the recent months involving thousands of crores in regard to one particular bank. It is clear that it is a fraud. Who should be worried most about the fraud?
"The owner should be worried about the system of monitoring and control of its own investment. That should be the focus of the owner."
"Whether the really guilty have been booked; whether they will be punished finally; and whether they act as a deterrent are questions that remain (to be answered). But, what is certain is that there is a loss of confidence in the integrity of the banking system."
"The PSBs do not have adequate capital to take care of depositors' interest, but since the majority ownership is that of the government, the deposits are safe. These are not limited liability companies, but institutions established under the law."