Prime Minister Narendra Modi says the system will not tolerate loot of public money, days after the PNB fraud surfaced. Photo: Reuters
New Delhi: Prime Minister Narendra Modi on Friday took a veiled swipe at the Reserve Bank of India (RBI) and auditors in the backdrop of the Rs11,400 crore PNB fraud, asking financial institutions to measure up to their responsibilities.
Speaking at the fourth edition of the Global Business Summit (GBS) organized by The Economic Times, Modi appealed to those entrusted with the task of upholding rules and ethics in different financial institutions to discharge their responsibility with utmost sincerity and integrity.
“Especially the ones who have the responsibility of vigilance and monitoring,” Modi said.
The prime minister said his government had been taking strong steps against economic irregularities and would continue to take such steps in future as well. “Misuse of public funds is not acceptable. This is the guiding principle of our new economy,” he said.
Modi also said forums such as GBS should debate the positive impact of conducting simultaneous elections on the Indian economy. “Due to continuous elections, decisions of foreign investors also get adversely impacted,” he added.
Finance minister Arun Jaitley had also found fault with the central bank’s supervision, and the role of auditors as well as the management of PNB, on Tuesday.
“Supervisory agencies need to assess as to what new system has to be put in place to detect irregularities…should ensure the stray cases are nipped in the bud and they are never repeated,” Jaitley said.
He also said that supervisory agencies will have to introspect and see what additional mechanisms have to be put in place.
The finance minister argued that such instances of fraud have a direct and an indirect cost. Besides the direct cost to taxpayers, there is an indirect cost as it impinges on the lending capacity of banks, he pointed out.
The RBI on Friday set 30 April as the deadline for banks to integrate SWIFT with core banking solutions (CBS) as it looks to strengthen internal controls in banks following the Rs11,400 crore PNB fraud.
SWIFT stands for Society for Worldwide Interbank Financial Telecommunication.
Experts say the PNB fraud, which happened via SWIFT, went undetected since it was not linked to CBS and because checks failed at several levels.
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