Rs 50 cr bad loan=possible fraud..Govt cracks whip on banks

New Delhi, Feb 27: Shaken by the Rs 11,400-crore PNB scam, the Finance Ministry on Tuesday set a 15-day deadline for public sector banks to come clean on bad loans above Rs 50 crore. The ministry said that all NPAs above Rs 50 crore should be treated as possible frauds and matter should be referred to CBI where ever necessary.  The Ministry also directed bank boards to assign and fix clear accountability of senior officers . The MDs of all the public sector banks have been directed to detect frauds or wilful defaults in time, and refer such cases to the CBI, Rajeev Kumar, Secretary in the Department of Financial Services said. 

"PSB (public sector bank) MDs directed to detect bank frauds & consequential wilful default in time and refer cases to CBI. To examine all NPA accounts > Rs. 50 crore for possible fraud," Kumar said.  From now on all Rs 50 crore plus NPA accounts shall be reviewed and examined, ED or DRI will be involved if PMLA or FEMA or EXIM violations are found. The banks have also been told to adop best practices in the banking industry, part from identifying existing weakness and suggesting strategies and technical solutions.

Here are the FinMin directions to public sector banks::

1.Prompt fraud identification and action within prescribed deadlines
2. CVO to vet complaint and coordinate for frauds exceeding Rs 50 crore
3. NPA cases above Rs 50 crore to be examined
4. Reported fraud to be examined for Wilful default
5. Banks to seek borrower status report from Economic Intelligence Bureau on account turning NPA. CEIB to revert in a week.
6. Banks to involve ED or DRI if conditions warrant

Government has asked  the Executive Directors and Chief Technology Officers (CTOs) of public sector banks to prepare a blueprint for  increasing preparedness in fighting financial risks.