The government of India has asked state-run banks to fix operational gaps within 15 days, asking them to check all bad loan accounts over £5 million for possible fraud. Sent out by Rajeev Kumar, secretary department of financial services, the latest directive comes after the £1.26 billion fraud in Punjab National Bank. Kumar tweeted, “15 day deadline for PSBs to take pre-emptive action and identify gaps, weaknesses to gear up for rising operation and tech risks; To learn from best practices and pinpoint strategies including tech solutions; clear accountability of senior functionaries.”
Managing Directors of state-run banks have been directed to detect frauds and any wilful default in time and refer cases to the CBI. They have also been asked to involve other investigative agencies such as the Enforcement Directorate (ED), Directorate of Revenue Intelligence (DRI) for any foreign exchange violations. Bank boards, it said, will assign “clear accountability” to senior functionaries for implementation and compliance of the best practices from the banking sector. Banks have also been asked to do “prompt fraud identification” and action within prescribed time.
The chief vigilance officer has been told to “vet complaints” and coordinate with the CBI for bad loans exceeding £5 million. Banks have also been asked to seek borrower status report from the Central Economic Intelligence Bureau on accounts turning into non-performing assets and have been told to involve ED and DRI if the situation demands. Executive directors (EDs) and chief technical officers (CTOs) have been tasked to prepare a blue-print to enhance preparedness for rising operational and technological risks. They have been told to undertake a comparative assessment of banks' operational risk management practices with the best practices and identify gaps and areas for improvements.
