Government Said To Ask PNB To Pay For Fraud Liabilities
State-run banks will review steps to prevent fraud and certify that systems are foolproof.
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The Finance Ministry plans to ask Punjab National Bank to compensate a major part of the loss to other banks once liabilities are determined, Bloomberg reported quoting a person with direct knowledge of the matter.
The banks are in the process of accounting for losses from the $1.8 billion fraud allegedly perpetrated by jewellers Nirav Modi and Mehul Choksi, the official told Bloomberg, asking not to be identified as discussions are private.
The Nirav Modi Case: How The $1.8 Billion Fraud Detected At PNB Unfolded
The state-run banks will review steps to prevent fraud and certify that systems are foolproof, the person said. The banks have also been instructed to check their nostro accounts held overseas. The crisis, following a spate of alleged fraudulent transactions at state-run banks, will be managed in the next two weeks, the person said.
Shares of the country’s second largest state-run lender dropped as much as 4 percent from the day’s high to Rs 112.30, close to its 52-week low.