Jaitley hits out at regulators, auditors

Union finance minister Arun Jaitley blamed on Saturday the inadequate oversight by regulators and auditors, as well as sloppy bank management, for the ₹11,400-crore alleged fraud Punjab National Bank.

Speaking for the second time this week on the scandal enveloping India’s second-largest public sector bank, Jaitley criticised the lack of ethics in certain sections of businesses and said multiple layers of auditing system chose to either look the other way or did a casual job.

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. Also, worrisome is “top managements who were indifferent to what was going on or were unaware of what was going on,” he said at an event in Delhi.

The finance minister also denied that the government was considering privatising state-run banks. “This involves a large political consensus… My impression is that Indian political opinion may not find favour with this idea itself. It’s a very challenging decision,” he said.

There were “at least multiple layers of auditing system which chose to either look the other way or do a casual job. You had inadequate supervision,” he said, referring to the bank management. “Therefore, I think who did what, will eventually find out in the course of investigation.”

Nirav Modi, his uncle Mehul Choksi and firms linked to them are alleged to have acquired fraudulent letters of undertaking (LoUs) from one PNB branch in Mumbai between 2011 and 2017 to obtain loans from Indian banks overseas. On Saturday, officials attached more immovable properties related to Modi, taking the total value of assets seized to more than ₹6,000 crore.

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