Finance Minister Arun Jaitley slams regulators, auditors for PNB fraud

Lloyd Doyle
February 24, 2018

"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", the Finance Minister said at the Business Summit organised by Economic Times.

Without naming either the alleged kingpin of the fraud, billionaire jeweller Nirav Modi, or PNB, he said it is "worrisome" that not a single red flag was raised when the fraud was perpetuated. Instead suggested the regulators, to keep their "third eye" open to detect an irregularity. Further speaking on the issue, Arun Jaitley said that such cases of willful defaulters were affecting the ease of doing business in the nation.

Stating that unethical practices in lender-borrower relationship where borrowed money is not meant to be returned should end, he said the initial experience of insolvency and bankruptcy code, where recoveries are made from serial defaulters by selling assets, has been reasonably transparent and objective. He also said tighter laws need to be implemented to ensure criminal acts in business lead to punishment, wherever the culprit is.

Jaitley said the question of "moral hazard" comes up in using taxpayers money to recapitalise banks that are hugely stressed on account of their accumulated non-performing assets (NPAs), or bad loans. Jaitley argued that cases like PNB fraud, in which jeweler Nirav Modi, along with his uncle Mehul Choksi, fooled the bank of Rs 11,300 crore, impacts the ease of doing business in the country.

Finance Minister Arun Jaitley on Saturday warned borrowers of dire consequences if they did not return money to the banks and asked industry to get into the "habit of doing ethical business" after India's biggest banking fraud in Punjab National Bank shook the country a fortnight ago.

"Rather than always have a close look at what government's are doing, Indian industry needs to look inwards and to a fair bit of introspecting", Jaitley said.

"Cases of willful defaults are something which is much more than a business failure and amounts to bank frauds".

Other reports by Iphone Fresh

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