PNB in cross-hairs again with ~6.2 million fraud
CBI files case against PNB staffer for Mudra scheme misappropriation
State-owned Punjab National Bank (PNB) is in the cross-hairs yet again after the Central Bureau of Investigation (CBI) registered a fresh case against fraudulent loans issued as part of the Mudra scheme, which was launched by Prime Minister NarendraModi to extend unsecured loans of up to ~1 million to small enterprises.
The fraud was reported at PNB’s Barmer branch in Rajasthan. The CBI alleged, in a case filed on Wednesday, that the senior branch manager “dishonestly and fraudulently sanctioned and disbursed 26 Mudra loans” between September 2016 and March 2017, causing a loss of ~6.2 million to the public sector bank.
The CBI has stepped up its vigil of the banking sector after the ~114 billion fraud at PNB involving jewellers Nirav Modi and Mehul Choksi came to light.
According to the CBI, PNB sanctioned Mudra loans “without conducting meaningful pre-inspection or physical verification of the spot of business or residence and without ascertaining the end-use of the loan amount or the creation of assets from the loan amount”.
The scheme provides a lower rate of interest on loans and the borrower is not required to submit collateral while taking a loan. However, after the loan is extended, the borrower needs to create an asset that will act as collateral. In the case of Mudra loans sanctioned by PNB, no assets were created and the CBI found major lapses on the part of the state-owned lender.
The CBI alleged that Inder Chand Chundawat, then senior branch manager at the PNB Barmer branch, did not conduct a pre-loan inspection, a physical verification of the spot of business and did not verify if assets were created out of the sanctioned loan.
The CBI said field verification was done only in one of the 26 sanctioned loans and that “appears to be fake and prepared on table at office”.
The branch is allowed to sanction loans to those residing within a 25 km radius. However, some borrowers were found to be residing 100 km away from Barmer.
Five of the 26 loan accounts have turned into non-performing assets as the loans were not used to create assets. “The bank cannot recover the outstanding ~6.2 million as no collateral is available with the bank. Thereby, the suspect public servant caused a loss of ~6.2 million to the bank and corresponding wrongful gains to himself and other unknown persons,” the CBI said in the case it filed.
The investigative agency also found that PNB’s deputy general manager at Jodhpur had conducted an inquiry into the matter and the section officer of the branch was suspended “but the suspension was revoked” and the executive was now posted at PNB’s Abu Road branch in Rajasthan.