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CII says PNB fraud shows gaps in supervision, seeks dilution of government stake

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New Delhi, Feb 23,  Condemning the recently detected $1.8 billion fraud at the Punjab National Bank (PNB), industry chamber Confederation of Indian Industry (CII) on Friday said the incident showed gaps in supervision and monitoring systems at the bank level.

“The current episode of financial fraud shows gaps in supervision and monitoring systems at the bank level which have the potential to become disruptive for the industry and the financial sector both,” said Chandrajit Banerjee, Director General, CII.

The statement said: “CII condemns such malfeasance by unethical enterprises, which are allegedly perpetrated in consort with certain corrupt employees of the affected banks.”

It further suggested the focus on enhancing supervision and monitoring at all levels; infusing professionalism in bank’s management, and dilution of government stake in PSBs to bring them down to 52 percent in the first phase and then further reduce to 33 percent.

It also suggested usage of smart technologies such as blockchain, big data analytics and artificial intelligence in banks.

CII stresses that the Government should consider lowering its stake in public sector banks (PSB) and increasing the equity spread through wider private participation.

“This should be accompanied by a consolidation of PSBs to result in fewer but stronger institutions of global scale,” it added.

“CII strongly feels that the current episode of malfeasance calls for focus and facilitation by the regulator to improve monitoring and supervision at the bank level,” the statement said.

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