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Financial services secretary updates Jaitley on PNB case

Press Trust of India  |  New Delhi 

The Rs 11,400 crore fraud in (PNB) came to light because of the government's pressure to clean up the banking system, Financial Services said today after updating Jaitley on the case.

The country's second largest lender PNB has detected a USD 1.77 billion (about Rs 11,400 crore) scam where billionaire allegedly acquired fraudulent letters of undertaking (LoUs) from a branch in to secure overseas credit from other Indian lenders.

The alleged fraud, which has been going on since 2011, came to light only in January this year.

Talking to reporters after meeting Jaitley along with senior officials, Kumar said the fraud transaction came to light "because of the pressure" from the government.

"If it (LoUs) was to get rolled over, it would have got rolled over this time also," he said, adding the next roll over came to notice on January 23.

The said the moment it came to notice that "it has to be rolled over, it was not rolled over. So, because of the pressure on the banks to clean up the system, they couldn't do it and the itself detected it."

On why the fraud went unnoticed for seven years, Kumar said it is a "systemic issue" and has to be looked into.

Earlier in the day, the said PNB will make the required provisioning and it has "sufficient" funds for it.

"Whole lot of assets will be recovered. Nobody will be spared," Kumar said.

He further said that the issue is an "isolated case of a single branch" and all possible action will be taken against the guilty persons.

"This is not likely to escalate to other banks. We have already frozen the case," he said, adding all other banks have been alerted about the case.

PNB has suspended 10 officers and referred the matter to CBI for investigation.

The CBI has received two complaints from the PNB against and a jewellery company alleging fraudulent transactions.

Meanwhile, Kumar, who briefed the on Demands for Grants along with other secretaries, was also quizzed about the PNB fraud case by the lawmakers, sources said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, February 15 2018. 20:50 IST