A deeper malady: on PNB fraud caset: THE HINDU EDITORIAL

A Deeper Malady: on PNB Fraud Caset: THE HINDU EDITORIAL

Barely days after news of the Rs.11,500 crore fraud at Punjab National Bank broke, another but very different scam of a Rs.3,695 crore wilful loan default has surfaced. The Central Bureau of Investigation has registered a case against three directors of a Kanpur-based company, and others including unknown bank officials, on allegations of cheating a consortium of banks by siphoning off loans disbursed to the company. If the two cases must be compared, the similarities lie in the breakdown in internal control mechanisms and in the supervisory failure at the banks. 
A deeper malady: on PNB fraud caset: THE HINDU EDITORIAL

In the case of Kanpur-based Rotomac Global, it had availed credit limits from a consortium of seven public sector banks. Given that the facility was made available from 2008 (in the case of Bank of Baroda, which filed the complaint with the CBI), and was used for a range of seemingly unrelated transactions including the import of gems and jewellery and the export of wheat, it is especially surprising that it took such a long time for this diversion of funds to surface as a criminal complaint. It is one thing for individual bank officials to have been complicit in the commission of frauds as has been claimed in the PNB case but quite another for supervisory cadre and risk detection and management systems to have delayed taking remedial action as they did in the Rotomac case. It took too long for the criminal complaints to be filed against the defaulters
On Bank of Baroda’s website Rotomac was listed as its top defaulter almost a year ago; the account had been classified as an NPA in 2015. In the case of the Punjab National Bank fraud, letters of undertaking were issued bypassing the bank’s reporting system; the three-tier audit failed to detect the malfeasance. In contrast, BoB was not oblivious of the Rotomac default and took unconscionably long to act. It is important to determine why the Reserve Bank of India, which is vested with keeping an eye on bank books, was unable to take prompt corrective action in this case. Rather than routinely reiterate the importance of strengthening corporate governance in public sector banks and promising to infuse greater professionalism, transparency and accountability, it is time the Centre, the major shareholder in these institutions, takes serious steps to translate this intent into action. 
Any improvement in the functioning of the PSBs cannot be undertaken without empowering bank managements and securing their independence from political interference while enforcing strict accountability for lapses. To restore the depositor’s faith in the banking system, the government, the RBI and the judiciary must ensure that prompt and salutary action is taken. The economic cost of doing otherwise is too painful to imagine.


1) Wilful
Meaning: (of a bad or harmful act) intentional; deliberate.
Example: “wilful acts of damage”
Synonyms: Deliberate, Intentional
Antonyms: Accidental, Unintentional
2) Surfaced
Meaning: Come to people’s attention; become apparent.
Example: “the row first surfaced two years ago”
Synonyms: Emerge, Arise
3) Consortium
Meaning: An organization of several businesses or banks joining together as a group for a shared purpose.
Example: A consortium of textile manufacturers.
Synonyms: Enterprise
4) Siphoning off
Meaning: To dishonestly take money from an organization or other supply, and use it for a purpose for which it was not intended.
Example: He lost his job when it was discovered that he had been siphoning off money from the company for his own use.
Synonyms: Fraud, Corruption
5) Availed
Meaning: Use or take advantage of (an opportunity or available resource).
Example: “my daughter did not avail herself of my advice”
Synonyms: Use, Utilize
6) Seemingly
Meaning: So as to give the impression of having a certain quality; apparently.
Example: “a seemingly competent and well-organized person”
Synonyms: Apparently, Avowedly
Antonyms: Genuinely
7) Complicit
Meaning: Involved with others in an activity that is unlawful or morally wrong.
Example: “the careers of those complicit in the cover-up were blighted”
8) Defaulters
Meaning: A person who fails to fulfil a duty, obligation, or undertaking.
Example: “a mortgage defaulter”
Synonyms: Non-payer, Tax dodger
9) Bypassing
Meaning: Avoid or circumvent (an obstacle or problem).
Example: “a manager might bypass formal channels of communication”
Synonyms: Avoid, Evade
10) Malfeasance
Meaning: An example of dishonest and illegal behaviour, especially by a person in authority.
Example: Several cases of malpractice and malfeasance in the financial world are currently being investigated.
Synonyms: Dishonest
11) Oblivious
Meaning: Not aware of or concerned about what is happening around one.
Example: “she became absorbed, oblivious to the passage of time”
Synonyms: Unaware, Unconscious
12) Unconscionably
Meaning: Morally unacceptable
Example: This unconscionable policy will cause great suffering.
​Synonyms: Unnecessary
13) Vested
Meaning: Give (someone) the legal right to power, property, etc.
Example: “the local planning authorities are vested with powers to regulate land use and development”
14) Keeping an eye on
Meaning: To watch someone or something or stay informed about the person’s behavior, esp. to keep someone out of trouble.
Example: Keep an eye on your brother while I’m out, please.
15) Reiterate
Meaning: Say something again or a number of times, typically for emphasis or clarity.
Example: “she reiterated that the government would remain steadfast in its support”
Synonyms: Repeat, Restate
16) Intent
Meaning: Determined to do (something).
Example: “the government was intent on achieving greater efficiency”
Synonyms: Bent, Determined
Antonyms: Half-hearted, Reluctant
17) Enforcing
Meaning: Compel observance of or compliance with (a law, rule, or obligation).
Example: “the role of the police is to enforce the law”
Synonyms: Impose, Apply
18) Lapses
Meaning: A brief or temporary failure of concentration, memory, or judgement.
Example: “a lapse of concentration in the second set cost her the match”
Synonyms: Failure, Failing
19) Prompt
Meaning: Done without delay; immediate.
Example: “she would have died but for the prompt action of two ambulancemen”
Synonyms: Quick, Swift
Antonyms: Slow, Late
20) Salutary
Meaning: (especially with reference to something unwelcome or unpleasant) producing good effects; beneficial.
Example: “it failed to draw salutary lessons from Britain’s loss of its colonies”
Synonyms: Beneficial, Profitable
Antonyms: Unwelcome, Irrelevant

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