PNB fraud: RBI calls it ‘a case of operational risk’, says will take supervisory action

NEW DELHI: RBI gave a statement on Punjab National Bank  fraud case involving businessman Nirav Modi. They denied giving any statement on ‘directing’ PNB to meet its commitments under the Letter of Undertaking (LOU) to other bank. RBI, in a press release, said - There have been reports in the media that in the wake of fraud involving a sum of USD 1.77 billion that has surfaced in Punjab National Bank (PNB), the Reserve Bank of India (RBI) has directed PNB to meet its commitments under the Letter of Undertaking (LOU) to other banks. RBI denies having given any such instructions.

There have been reports that in wake of fraud involving the sum of USD 1.77 billion that has surfaced in Punjab National Bank, RBI has directed PNB to meet its commitments under Letter of Undertaking to other banks. RBI denies having given any such instructions: RBI #PNBFraudCase

— ABP News (@abpnewstv) February 16, 2018

  The press release further says “the fraud in PNB is a case of operational risk arising on account of delinquent behavior by one or more employees of the bank and failure of internal controls. RBI has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action.”

It's case of operational risk arising on account of delinquent behaviour by one or more employees of the bank & failure of internal controls. RBI has already undertaken supervisory assessment of control systems in PNB & will take appropriate supervisory action: RBI #PNBFraudCase — ABP News (@abpnewstv) February 16, 2018

  On Wednesday, Punjab National Bank had detected fraudulent transactions of Rs 11,500 crore in one of its Mumbai branches and has filed a complained against Nirav and others to the CBI. The External Affairs Ministry on Friday suspended with immediate effect the passports of diamantaire Nirav Modi and his business partner Mehul Choksi. The Ministry of External Affairs (MEA) also said that it is "not aware" of businessman Nirav Modi's location at the moment. Meanwhile, the Enforcement Directorate and Central Bureau of Investigation have been conducting regular searches and raids. So far they have seized property worth Rs 5,100 crore. Nirav Modi was initially charged last month with causing a wrongful loss. The other partners who were allegedly involved in fraudulent transactions were Nirav's wife Ami, brother Neeshal and maternal uncle Mehul Choksi, who owns Gitanjali Gems.