Bank Union wants CBI probe into PNB fraud, alleges RBI failed as regulator

All India Bank Employees Association (AIBEA) has demanded a CBI probe into the PNB fraud case and hasalso sought a parliamentary probe to rid banks of ‘NIMO’nia ailments in future. It has asked the Centre to keep the top management away from PNB until the probe is complete.  

At a time when banks are facing the problem of huge irrecoverable bad loans and getting into losses due to provisions to be made from the profits earned, the PNB – NIMO fraud has exposed the increasing trend of corporate loot of banks, said C H Venkatachalam, general secretary, AIBEA.

"Attempts are being made to dilute the magnitude of the fraud", he alleged. Action against two employees at the lower level gives an impression that only the lower level officials and staff are responsible, he added. 

"It is very strange that the top management and Board members of the Banks are not covered by any Disciplinary and Conduct Regulations though they take very vital decisions. They are also to be covered by the same set of rules like other officers of the Banks.  The government should look into this aspect also," said Venktachalam.

He said the fraud has also raised a number of questions on technology issues, supervision, monitoring, audit, internal control, etc. besides role of RBI in the whole episode.
  
AIBEA also questioned how is it that the RBI, which carries out a regular audit of the banks, did not smell the fraud, despite the number of years and the volume of money involved?

The Union also alleged that the RBI has failed to fulfill its role as a regulator of the banking sector.

Questions raised by AIBEA 

  • Why was the branch official kept in the same branch/department for so many years contrary to rules?
  • What about Banks Nostro account? is there no control on the entries in this account?
  • When Nirav Mody’s other loans are sanctioned and renewed, why was his huge business volume, import bill business, etc. overlooked? 
  • Is it that any employee can issue an LoU and advice the foreign correspondents by SWIFT without anyone’s knowledge?
  • Does the top management believe that only some local official is involved and top management has no accountability?



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