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Punjab National fraud losses top £310m

PNB has been hit
by numerous frauds
in the past year
CONTROVERSY: PNB has been hit by numerous frauds in the past year

INDIA’S Punjab National Bank lost `28 bil­lion (£310 million) to various frauds last fiscal year, the government said last Friday (9), making it the biggest such loser among all state-owned banks even before it un­covered an alleged $2bn fraud this year.

The country’s second-biggest state-owned bank in February accused two high-profile jewellers and their compa­nies of colluding with rogue bank em­ployees to secure credit from overseas lenders using fraudulent guarantees be­tween 2010 and 2017.

This has been dubbed as the biggest bank fraud in India’s history, but the finance ministry told parliament that even before the fraud came to light, state banks lost a total of `195.33bn to 2,718 cases of fraud in the year that ended on March 31, 2017.

Punjab National, better known as PNB, alone reported 158 cases of fraud in 2016/17, the ministry said. PNB did not immedi­ately respond to a request for comment.

In monetary terms PNB was followed by Bank of India, which lost `27.7bn, and State Bank of India that lost `24.2bn, the ministry said.

The ministry did not specify the na­ture of the frauds but added that the central bank recently formed an expert committee to look into “factors leading to increasing incidence of frauds in banks and the measures needed to curb and prevent it”.

The committee will also look into the role of auditors in checking frauds.

A parliamentary committee on fi­nance said in a report last Friday that it was “extremely concerned about the re­cent fraud detected in Punjab National Bank, which clearly reflects that a small group of individuals can manipulate such a gigantic bank and compromise it despite such well laid out norms, guide­lines, checks and balances.”