Regulators have a very important function, regulators ultimately decide the rules of the game and they have to have a third eye which perpetually be open. Unfortunately, in the Indian system we politicians are accountable but regulators are not: FM Jaitley pic.twitter.com/xNRCnKZVAH
He also slammed bank management for failing to do their job saying inadequate supervision and top management being unaware of what was going on in the bank was worrisome.
Highlighting the role of regulators in the economy, Jaitley hinted at the introduction of new regulations, adding that they need to keep a "third eye" on the sector. He also said tighter laws need to be implemented to ensure criminal acts in business lead to punishment, wherever the culprit is.
"Cases of willful default and bank frauds are much more than a business failure. If you periodically have incidents like these, the entire effort around ease of doing business goes into the background and these scars on the economy take the front seat,” he said.
Cases of willful default is something which is much more than a business failure and also bank frauds. If you periodically have incidents like these, the entire effort of ease of doing business goes to background and these scars on the economy take the front seat: FM Jaitley pic.twitter.com/Vz0uSksotV
— ANI (@ANI) February 24, 2018
“If a fraud is taking place in multiple branches of the banking system and no one raised the red flag, it is a matter of concern for the country. Similarly, the indifference of the top management and multiple layers of auditing system which chose to look the other way has created a worrisome situation," he said.
In lieu of the Rs 114-billion Punjab National Bank (PNB) fraud involving top jewellery designer Nirav Modi, and his uncle Mehul Choksi, Jaitley had earlier stressed on the need for supervisory agencies to assess what new systems had to be put in place to find those who were cheating banks.
"What were auditors doing? If both internal and external auditors have looked the other way and failed to detect, then I think CA professionals must introspect. Supervisory agencies also must introspect what are the additional mechanisms they have to put in place," he said.
The public sector Punjab National Bank had earlier this month detected Rs 114 billion scam in which Nirav Modi had acquired fraudulent letters of undertaking from one of its branches in Mumbai for overseas credit from other Indian lenders.