New Delhi: State-owned Punjab National Bank (PNB) had witnessed losses of Rs2,808 crore on account of frauds in 2016-17, almost a year before it unearthed the mega scam of Rs12,646 crore perpetrated by billionaire diamond jewellers Nirav Modi and Mehul Choksi, Parliament was informed on Friday.
Enlisting the bank-wise details of cases of fraud reported by public sector banks, involving an amount of Rs1 lakh and above for 2016-17, finance minister Arun Jaitley in a reply to the Lok Sabha said that Punjab National Bank encountered 158 such cases that caused loss of Rs2,808.27 crore to the bank. In 18 of these cases, employees from PNB were also involved in perpetrating the fraud.
Country’s largest lender SBI had reported to be hit by fraud of Rs2,422 crore in 544 cases, out of which 83 were cases in which bank employees were also involved.
Collectively, all the 27 public sector banks (PSBs)—when the five associate banks of SBI and Bharatiya Mahila Bank were not amalgamated with State Bank of India (SBI)—had incurred losses of Rs19,533 crore in 2016-17. Among others, Bank of India took a hit of Rs2,774 crore (162 cases); Bank of Baroda Rs1,165 crore (224 cases); Indian Overseas Bank Rs1,372 crore (95 cases); IDBI Bank Rs1,137 crore (107 cases); Union Bank of India Rs921 crore (111 cases): Allahabad Bank Rs895 crore (60 cases) and Central Bank of India Rs868 crore (146 crore).
In 2015-16, the PSBs had reported a total fraud of Rs16,910 crore (2,789 cases) and in 2014-15 they incurred losses of Rs16,803 crore (3,113 cases) due to frauds. PNB had reported fraudulent issuance of letters of undertaking/foreign letters of credit for payments of import bills, amounting to Rs12,645.97 crore to RBI through its Fraud Monitoring Reporting System.
Jaitley said the government has issued an advisory to PSBs to take immediate action as per extant legal/regulatory framework to ensure that such/similar fraudulent activity (as reported by PNB) is not prevalent in the bank. “Government has further advised PSBs to collectively prepare a report for effective management of operational risks, including technology risk, so as to safeguard against occurrence of frauds," he said.
In response to a separate query on steps taken by government and RBI to recover money, minister of state for finance Shiv Pratap Shukla said, “With regard to effect of the fraud on PNB and other banks, RBI has stated that it does not have specific information. PNB has stated that it has adequate assets/capital to meet any liability which may crystallise on the bank." He said the Central Bureau of Investigation (CBI) has registered two cases relating to the matter and as of 3 March, 2018, had arrested 18 persons.
As per CBI inputs, eight public servants belonging to PNB had been arrested as on 6 March, ranging from the rank of general manager to single window operator. “The matter is under investigation. A total of 21 PNB employees have been suspended," he said.