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RBI board questions Governor Shaktikanta Das on financial scams since 2018: Report

A few members of the board voiced their concerns over the the supervision performed by RBI officials.

October 16, 2019 / 09:22 PM IST
Shaktikanta Das

Shaktikanta Das

Two external directors on the board of Reserve Bank of India (RBI) questioned Governor Shaktikanta Das about scams that have been unearthed in the banking sector since 2018, according to an Economic Times report.

The directors questioned Das over the Punjab National Bank (PNB) scam involving fugitive economic offender Nirav Modi and his uncle Mehul Chowksi, irregularities detected following the IL&FS scam that surfaced in September 2018, and the recent Punjab and Maharashtra Co-operative Bank (PMC) Bank scam.

A few members of the board voiced their concerns over the the supervision performed by RBI officials.

One of the biggest banking frauds in India was executed by jeweller Nirav Modi and Associates at PNB. Modi and Choksi allegedly cheated the bank to the tune of Rs 14,000 crore.

There were procedural lapses as RBI's advice of linking Society for Worldwide Interbank Financial Telecommunication (SWIFT) with Core Banking Solution (CBS) system was not followed at the bank.


In 2018, a series of defaults by group companies of IL&FS on term deposits, short term deposits, inter-corporate deposits, commercial paper and non-convertible debentures resulted in a massive sell-off in shares of non-banking financial companies (NBFCs). It created a large systemic risk in the market after a rating downgrade.

On September 2019, RBI got Punjab and Maharashtra Cooperative Bank (PMC Bank) under directions. It was later discovered that the bank breached its group exposure limit and did not classify loans given to Housing Development & Infrastructure (HDIL) as bad loans even as the real estate company stopped repaying them several years ago.

With total advances at Rs 8,400 crore as on March 31, the exposure to HDIL Group comes to almost a third of the PMC Bank's loan book.

The scams have brought the role of RBI and auditors under scrutiny.
Moneycontrol News
first published: Oct 16, 2019 09:22 pm

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