PNB Fraud: Special Audit Of PSBs; RBI Inquires On LoUs Issued

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    As per the banking sources quoted in the PTI report, to address the different PSB scams that have unearthed in recent time, the apex banker has ordered a special audit with focus on trade financing activities.

    PNB Fraud: Special Audit Of PSBs; RBI Inquires On LoUs Issued

    The banker to the bank has asked all state-run lenders to provide it details on different LoU or letter of undertakings issued or written by them in favour of different corporates for securing short term credit.

    The banks need to furnish all such information including the outstanding loan amount, and whether the bank has proactively mitigated the risk in these LoUs through pre-approved credit limit or enough margin money.

    The PTI report states that including the recent Nirav Modi PNB scam, all such willful default have their origination in trade finance.

    And so in the light of such scam, RBI is scrutinizing trade financing related activities that involves issuance of LoUs and LC.

    Since the Nirav Modi scam, several such similar cases have come to light in which businesses have frauded on bank loans through trade finance mechanism.

    To this effect, the finance ministry has asked banks to accord clear accountability to senior officials as well as work out a pre-emptive action plan for mitigating increasing technical and operational risk in 15 days time.

    With Inputs From PTI

    Story first published: Monday, March 12, 2018, 10:46 [IST]
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