PNB fraud overreaction may hugely hurt credit flow: Assocham

Monday, March 12, 2018

Overreaction by banks and investigative agencies to the Rs 12,600 crore fraud on state-run Punjab National Bank (PNB) which came to light last month could hurt essential credit disbursement to trade and industry, tempering growth expectations, industry association Assocham said on Sunday.

Supporting the calls from industry for privatising public sector banks (PSBs) in the wake of the PNB scam by accused diamantaire Nirav Modi and his uncle Mehul Choksi, Assocham said that some immediate steps should be taken for capacity building in PSBs.

"Following unearthing of the alleged scams and the media headlines, the banks are becoming cautious while there is a perceived public pressure on the regulators to act tough," Assocham Secretary General D.S. Rawat said in a statement.

Given the scale of the problem, the level of noise may be justified, but it could cause a huge loss of confidence."

"So, it is time to show immense restraint and use the adverse situation as an opportunity to fix the systemic issues," he added.

According to the industry chamber "all out efforts must be made by banks, regulators, government and India Inc to limit the collateral damage from the alleged fraud in PNB".

Pointing to the US experience of handling the global financial crisis of 2007-08, "where the authorities worked at the root of their banking system and have put in place some robust risk mitigation and prudent systems", Assocham also called for immediate steps to build capacity in PSBs "to prevent, detect and act on frauds".

"Given the technology disruption taking place and India's ambitions to enhance digital footprints, it is all the more important to put in place robust systems which are well beyond compromise," the statement added.

Last month, Assocham had said that the PNB fraud that has rocked the banking system should not halt the process of corporate lending as demoralisation would set in among PSB employees at a time of a general slowdown in private investment and a highly leveraged corporate India.

Pointing out that letters of credit (LOC) or letters of undertaking (LOU) allegedly misused by the diamond traders are legitimate instruments in global trade, Assocham said: "While we may seek long-term solutions like privatisation of the banks, the need of this hour is to rally around honest bank officers and the honest business entities which have built trust on each other."

Express your comment on this article

Submit your comments...
Disclaimer: The views expressed here are strictly personal and does not hold any responsibility on them. We shall endeavour to upload/publish as many of the comments that are submitted as possible within a reasonable span of time, but we do not guarantee that all comments that are submitted will be uploaded/published. Messages that harass, abuse or threaten other members; have obscene, unlawful, defamatory, libellous, hateful, or otherwise objectionable content; or have spam, commercial or advertising content or links are liable to be removed by the editors. We also reserve the right to edit the comments that do get published. Please do not post any private information unless you want it to be available publicly.

Don’t Want a Day… Want a Deal!

I am a Woman and like me, there are countless other women out there who do not want Days to commemo


My heart, my soul and all my sincerity is for this country – Ajiaz Ahmad Sarfaraz

“By serving this great country for more than three decades, I feel that the word ‘great’ fully appl


Teamwork Makes The Dream Work! – Nomaan Sidiq Budroo, Captain of Kuwait U-19 Cricket Team

Kuwait Cricket’s National U 19 team returned home after their best ever performance in the ICC U 19


A Walk in the Garden…

Our garden in Salmiya is an exciting learning-place… Every walk in it, teaches something every time


Take Thoughts Outside Box

"Where are the songs of spring? Ay, where are they?’’ I sighed, when others were busy with Keats, S


‘Be what you are, Do what you can’, a self-confident go getter, N.K. Ramachandran Menon

He believes, ‘No one can influence anyone’. He believes, ‘I can only be me and it is true for ever


How to carry out a winning scientific project?

I have been involved in judging scientific projects in schools and colleges for the past three deca


Extraordinary artist of ribbon work – Mrs Poornima

Hand Embroidery is one of the most beautiful artworks. There are variety of Embroideries which uses


Work hard, but enjoy your job – Ravi Varrier spending 40 years in a company!

Spending long working years with a company may not be a big deal if you are a sincere employee. But


Smart Investing - Diversification is the Mantra: Don’t keep all the eggs in one basket

Investment is an activity which everyone should be involved once they start earning. But where to i


New Menu at Zafran Puts Contemporary Spin on the Traditional

Fans of Zafran can rejoice as the popular Indian bistro launches a new menu this week. The front


A nostalgic and delicious train journey in Kuwait at Kerala Express Restaurant

A train journey during our annual vacation in India is definitely a nostalgic experience for many o


Mughal Mahal Exotica - An aromatic and exotic twist to Indian food

When it comes to Indian food in Kuwait, no doubt ‘Mughal Mahal’ set an example among the residents


Experience Indian Corner Tandoori Nights at Al Manshar Rotana Hotel

Al Manshar Rotana Hotel at Fahaheel, Kuwait launched an authentic Tandoori Night with an Indian cor


Fahaheel English Madrasa wins Shifa Al Jazeera Al-Nahil Soccer Championship Cup

Fahaheel English Madrasa emerges champions in the inter-madrasa soccer championship tournament or


Shifa Al Jazeera Soccer Kerala Fest– 2018 - United Goan Centre (Ugc) Emerge The Champions

United Goan Centre (UGC) on of the oldest Football Club in Kuwait Indian Football Federation, Kuwai


Del Potro eliminates Ferrer at Indian Wells

Sixth-seeded Argentine Juan Martin del Potro rose to the round of 16 of the Indian Wells Masters te


U G C 42nd Edition Football 2018 and Interschool Under - 15 Football Tournament

Wednesday,7th March 2018: Last Friday started off with an early morning kickoff of the conclusion t


Kuwait Cricket Concludes AGM in Emphatic Style Kc President Haider Farman Appoints Gibbs as National Coach

Kuwait Cricket, the official governing body for Cricket in Kuwait, conducted their AGM in a specta