PNB scam fallout: Here's why banks must relook at indemnity policies

Given the reluctance to part with data and tendency to minimise the risks, those in the segment say banks need to seriously relook at whether they're covered for a PNB-type case

In the wake of the Punjab National Bank (PNB) scam, banks might take another look at their indemnity policies that cover specific operational risks. Currently, most banks are buying indemnity covers for as low as Rs 20 million and going up to Rs 250 million, miniscule, according to analysts.
 
Public sector banks (PSBs) lost Rs 227.43 billion due to banking fraud between 2012 and 2016, according to a study at the Indian Institute of Management, Bengaluru. Electronics and information technology minister Ravi Shankar Prasad recently told Parliament there were 25,600 cases of banking fraud totalling Rs 1.79 billion reported