NEW DELHI: In a rare construction, the finance ministry has sought details from the Reserve Bank of India relating to imaginable systemic screw ups related to the Nirav Modi-Mehul Choksi-triggered fraud at the state-run Punjab National Bank, a transfer observed as striking the onus of the lapses for the Rs 11,300-crore rip-off at the regulator.
Many interpreted the letter from the department of monetary services and products as just wanting in search of an cause of the fraud that went undetected for over six years right through which neither the financial institution's auditors, now not the regulator's inspections had thrown up any red flags. So far, RBI has maintained a studied silence aside from a press statement remaining week blaming the fraud on "operational risk" due to "delinquent behaviour" of a few workers and "failure of internal controls".
The finance ministry and RBI have sparred again and again over the route of rates of interest and had been enthusiastic about many other turf battles but this is the primary time in recent reminiscence that friction has erupted over a regulatory factor.
In fact, the RBI's function - in spite of its claims of a powerful supervisory structure - has come beneath the spotlight due to a series of lapses at banks, together with the huge pile-up of bad debt.
While the government can instruct the RBI beneath the current prison framework to initiate motion, the power has remained best on paper. The fraud has brought on super unease in the govt and it is beneath pressure to not just nab the fugitive diamond buyers Nirav and Choksi but also repair the systemic gaps in the banking sector.
Sources stated the government has sought the regulator's inputs how systems and processes can be up to date to prevent such frauds in future aside from its opinion of the failure of the auditors to locate the fraud that has been happening since 2011. They stated the government is having a look at fresh steps to crack down on monetary frauds.
Many interpreted the letter from the department of monetary services and products as just wanting in search of an cause of the fraud that went undetected for over six years right through which neither the financial institution's auditors, now not the regulator's inspections had thrown up any red flags. So far, RBI has maintained a studied silence aside from a press statement remaining week blaming the fraud on "operational risk" due to "delinquent behaviour" of a few workers and "failure of internal controls".
The finance ministry and RBI have sparred again and again over the route of rates of interest and had been enthusiastic about many other turf battles but this is the primary time in recent reminiscence that friction has erupted over a regulatory factor.
In fact, the RBI's function - in spite of its claims of a powerful supervisory structure - has come beneath the spotlight due to a series of lapses at banks, together with the huge pile-up of bad debt.
While the government can instruct the RBI beneath the current prison framework to initiate motion, the power has remained best on paper. The fraud has brought on super unease in the govt and it is beneath pressure to not just nab the fugitive diamond buyers Nirav and Choksi but also repair the systemic gaps in the banking sector.
Sources stated the government has sought the regulator's inputs how systems and processes can be up to date to prevent such frauds in future aside from its opinion of the failure of the auditors to locate the fraud that has been happening since 2011. They stated the government is having a look at fresh steps to crack down on monetary frauds.
Finance ministry asks RBI for details of 'systemic failures'
![Finance ministry asks RBI for details of 'systemic failures']()
Reviewed by Kailash
on
February 20, 2018
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