In his address to a room full of bankers, Finance Minister Arun Jaitley blamed a chunk of Indian business for “lack of ethics”. Criticizing lapses by auditors and regulators after the financial sector was hit by the PNB scam, he kept referring to a “stray incident” in his speech and although he refrained from specifically naming the state-run Punjab National Bank, it was evident that he was referring to the lender and the fraud involving Nirav Modi.
The minister said the country needed to ponder over “the lack of ethics that a section of Indian business follows”, and said internal and external auditors needed to analyse whether they had “looked the other way or failed to detect” any malpractice. So far, Arun Jaitley is the highest-ranking government official to talk about the case.
He also said “the supervisory agencies” needed to “introspect as what are the additional mechanisms they have to put in place to ensure that stray cases don’t become a pattern again”.
“It is incumbent on us as a state … to chase these people to the last possible conclusion to make sure the country is not cheated,” he said. On being asked if he had any specific comment on PNB, Jaitley said: “I have said in the speech what I had to say.”
Ever since the fraud came to light last week, the Reserve Bank of India and the auditors have been on the receiving end of criticism over how could they fail to detect such a massive scam.
After Arun Jaitley’s speech, RBI said that banks have been alerted to prevent any “potential malicious use of the SWIFT infrastructure” at least three times since August 2016 but they failed to implement the required measures.
The RBI did not name any banks but said it had ordered lenders on Tuesday to implement measures to strengthen their oversight of the SWIFT platform.
Reports say that the government wrote to the central bank to improve its oversight mechanism of lenders.