Demanding a joint parliamentary committee (JPC) probe into the recent banking fraud, the United Forum of Bank Unions (UFBU) — a body of nine trade unions — on Monday questioned the supervision mechanism of the Reserve Bank of India (RBI).
“We are demanding a detailed JPC probe into the recent Punjab National Band (PNB) fraud. The fraud has raised a number of questions on technology issues, supervision, monitoring, audit, internal control and role of RBI in the entire episode,” UFBU’s West Bengal Convenor Siddharth Khan told reporters here.
“How is it possible that the RBI, which carries out a regular audit of the banks, did not even detect the fraud despite the number of years and the volume of money involved,” he asked.
According to Khan, the Harshad Mehta scam took place because of the so-called “innovative” measure of “Banker’s Receipt” and the Nirav Modi fraud exploited the new “Letter of Undertaking” instrument.
“Was the RBI not aware of the possible misuse of LoU,” he asked.
All the nine trade unions would organise a rally on Wednesday in front of Parliament, to highlight various issues concerning the banking sector, including the growing non-performing assets and scams.
The union also wanted to know whether the SWIFT software used in the fraud was approved by the apex bank.
It also opposed the proposed Financial Resolution and Deposit Insurance (FRDI) Bill, 2017.