The government on Tuesday asked state-run banks to fix operational gaps within 15 days and said lenders must check all bad loan accounts over Rs 50 crore for possible fraud. The latest directive has been sent by Rajeev Kumar, the secretary - department of financial services, after the over Rs 12,600-crore fraud in Punjab National Bank (PNB) triggered allegedly by fugitive jewellery czars Nirav Modi and Mehul Choksi.

“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,” Kumar said on micro-blogging site Twitter.

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) and Directorate of Revenue Intelligence (DRI) for any foreign exchange violations. It said that bank boards will assign “clear accountability” to senior functionaries for implementation and compliance of the best practices from the banking sector.

The banks have been asked to do “prompt fraud identification” and action within prescribed time limits. The chief vigilance officer (CVO) has been told to “vet compliants” and coordinate with the CBI for bad loans exceeding Rs 50 crore. Any reported fraud has to be for wilful default, according to the latest guidelines from the government.

Banks have also been asked to seek borrower status report from the Central Economic Intelligence Bureau (CEIB) on accounts turning into non-performing assets (NPAs) 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 blueprint 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. They have also been asked to suggest action points, including technological solutions.

Since the PNB fraud, the government has undertaken a series of measures to shore up functioning of state-run banks to ensure that bank processes are robust enough to detect wrong-doing and there is greater vigilance to prevent any major scam. It has been constantly monitoring the situation including a review of NPAs and large exposures of state-run banks. #casansaar (Source - PTI, Times of India)