The PNB fraud – A comment

Introduction

Effective and efficient banking is the fundamental prerequisite for seamless functioning of the economy. The Indian financial system, it has begun to develop swiftly and has encountered several obstacles. Recent frauds have proven that the bank is exposed to several danger like fraud, embezzlement, scams etc. the study findings has indicated that expanding number of frauds have weakened the credibility of financial report.

Banking scam is also defined as banking fraud. At a time when the purpose of bank is recapitalization, Scams are big challenge for whole banking industry. A default of Rs 12700 crore were identified in PNB, it may be recalled that the public sector bank lost at least 227 billion of the bank fraud in past five year. Nirav Modi is an Indian diamond dealer who owner of Getangali gems and Firstar diamond. Which was launched in 2010 by its creator Nirav Modi.[1]

The RBI defines fraud as “A deliberate act of omission or commission by any person, carried out in the course of banking transactions or in the books of accounts maintained manually or electronically in banks, resulting in to wrongful gain to any person for a temporary period otherwise, with or without any monetary loss to the bank.”

The prerequisite for the correct operation of the economy is an effective and good financial system. The banking sector is experiencing several difficulties as a result of its recent fast growth. Recent frauds have shown that the bank is exposed to several risks, including fraud, scams, etc., and that engaging in banking fraud is illegal. Scams are a major issue for the banking sector overall at a time when banks’ goals include recapitalization.

Introducing the Punjab National Bank

The first Swadeshi bank in India, Punjab National Bank, began operations in Lahore on 12^th April 1895 with a working capital of Rs. 20,000 and an authorized capital of Rs. 2 lakhs. The bank has more over 10 crore clients, a 122-year track record of success, steadily rising operational profits, low deposit costs, and an accelerated rate of digitization.

Today’s banks have a significant difficulty in properly managing non-performing assets in order to enhance their financial health and soundness. The solvency situation of the banks is under stress as a result of increasing NPAs. (1) The majority of research have emphasized the mobility of NPAs in India’s scheduled commercial banks, according to a review of earlier literature. (2) A previous literature analysis also suggests that there haven’t been many research on NPA Forecasting.

Indians with Indian capital ran the bank. PNB launched its first location outside of Lahore in India in 1900. On March 31, 1947, bank authorities made the decision to relocate the corporate headquarters from Lahore to New Delhi. PNB was nationalized in 1969 together with 13 other major commercial banks. In 1978, PNB established a branch in London. In 1988, it bought Hindustan Commercial Bank Limited. PNB acquired New Bank of India in 1993. It acquired Nedungadi Bank in Kerala in 2003.

PNB has successfully competed with its corporate objective of “generating value for all its customers, investors, and workers to be the first option for all stakeholders” during the course of its lengthy history, which includes the merger of seven banks. PNB had worldwide success starting in 2004. In 2004, it established branches in Kabul, Dubai, and Nepal.

It established branches in the UK and Hong Kong in 2006, received an office in Bhutan in 2009, and launched a Sydney branch in 2011. PNB and MetLife, a life insurance business located in the US, inked an agreement in 2012.  However, 2018 was a bad year for PNB since it was implicated in the largest bank theft scheme, worth Rs. 11,400 crores, which destroyed its market value and caused investors and consumers to lose trust in the company.

In response to the fraud, PNB developed a watchdog system, a whistleblower policy, and no one has been refused access to the audit committee. In order to make it easier to identify the need for change and to increase the trust of shareholders and customers, PNB has established a special team named “Mission Parivartan.”

Critical analysis using the 5W2H:

What happened?

The government-owned Punjab National Bank (PNB) said on February 14 that it has found fraudulent transactions at one of its Mumbai branches totalling $1.77 billion (about Rs. 11,400 crore).

The bank accused the companies and individuals connected to billionaire jeweller Nirav Modi of orchestrating this significant fraud by utilizing bank employees in a complaint to the Central Bureau of Investigation. Employees at PNB produced phony letters of authorization

In the international banking system, a Letter of Undertaking (LOU) is a clause of bank guarantee, under which a bank permits its client to get a short-term loan from a foreign branch of another Indian bank.

The LOU acts as a bank guarantee, thanks to which PNB received dollar loans from the overseas operations of a select Indian banks, notably Axis and Allahabad Bank. These foreign exchange loans were used to support PNB’s Nostro accounts, from which money was transferred to certain foreign parties. The account that an Indian bank (in this case, PNB) holds with a foreign bank is known as a Nostro account.[2]

PNB still owes State Bank of India, Allahabad Bank, and Union Bank, among others, bank guarantees totalling Rs 11,400 crore. Over the next months, these instalments are due. The banking, jewellery, and insurance industries have all been impacted by this. This calls into question the reliability of Public Sector Banks and the function of the RBI and SEBI as regulators.

When did it happen?

On January 29, 2018, Punjab National Bank (PNB) filed a police complaint alleging that two of its employees were assisting Nirav Modi and Mehul Choksi in acting illegally and defrauding the bank of Rs. 2.81 billion.

On February 5, 2018, CBI scheduled a meeting and started the investigation. Additionally, the bank informed SEBI that it was investigating the incident. On February 14, 2018, PNB announced a fraud of Rs. 11400 crore. In addition, international banks reportedly reported that money was handed to Modi by PNB workers in an unauthorized manner.

On February 15, 2018, the PNB CEO declared that the company has begun working with authorities, agencies, and other banks in a news conference the following day. According to the CBI findings, Mehul vanished before the complaint against PNB was admitted.

After receiving a complaint on Mehul Choksi on February 16, 2018, the CBI looked into around 20 Gitanjali Group retail sites. In a statement, PNB expressed optimism that the loss would be recovered within six months.

According to statistics on risk exposure from other banks, including Union Bank of India ($300 million), State Bank of India ($212 million), and UCO Bank ($412 million), Allahabad Bank’s credit exposure to fraud is $365 million. The Reserve Bank of India mandated strict supervisory measures.

On February 17, 2018, the CBI issued an arrest warrant for two PNB workers and a Nirav Modi group executive who were implicated in a fraud. Diamonds, gold, and jewellery worth Rs. 56.74 billion was seized from Nirav Modi’s residence and workplace by the Enforcement Directorate (ED).

Regarding the Nirav Modi case, this issue had been present for the previous seven years. The Winsome Diamond group scam in 2013 had an impact on PNB as well. The banking industry has experienced various levels of fraud at various times, so scams are nothing new to it. Consequently, this is a persistent issue.[3]

Who was the victim of the problem?

PNB has been dealing with a problem worth 11,400 crores. Though technically the exposure was taken by Allahabad Bank and Axis Bank, PNB will be required to make up the lost funds, according to banking circles. PNB discovered the issue and informed RBI and CBI of it.

On February 20, 2018, The PNB share price has fallen as a result of the PNB scandal. There was a decline in market capitalisation. Regarding the deficiency in the SWIFT interbank communication infrastructure, the RBI and Finance Minister Arun Jetly released a statement. Diamond star Nirav Modi and his attorney denied that they had not committed any financial crimes.

But according to ED’s investigation, Modi and Choksi unlawfully passed the money via around 100 shell businesses. CBI detains three more Nirav Modi Group officials.

The timeline of the scam

February 21, 2018: The CBI has taken several of the corrupt personnel into custody. One of the offenders was Mr. Rajesh Jindal, general manager of PNB. From 2009 to 2011, he worked at the Mumbai office where the fraud was perpetrated.

On February 22, 2018, the ED seized, redeemed, and sealed a number of Nirav Modi and his uncle Mehul Choksi’s assets, including shares and other securities, a farmhouse, and expensive automobiles.[4]

On February 23, 2018, the Institute of Chartered Accountants of India (ICAI) designated independent auditors to begin the PNB fraud inquiry. The RBI announced stringent oversight over the SWIFT system. Priyanka Chopra, a brand ambassador and very successful actress, has announced that she is severing all links and contracts with Nirav Modi’s company.

On February 24, 2018, Gitanjali Group owner Mehul Choksi startled everyone by pretending to be in favour of his arrest by the CBI in an open letter to his staff. Many of his moveable and immovable possessions have been taken by ED. Jewellery designer Modi’s company Firestar Diamond filed for bankruptcy on February 27, 2018 in the US.

The financial condition of every corporation must be cross-balanced, and this is where the external and independent auditor comes into play. The previous auditor, M.K. Sharma, was identified as the offender in the PNB scandal and was in charge of influencing the whole audit system and procedures at the Brady House branch in Mumbai. He was apprehended by CBI for his role in the con.[5]

On March 1, 2018, PNB’s internal auditor Bishnubrata Mishra was also found guilty of aiding in the commission of the largest fraud, in addition to the external auditor. He worked for the company from 2011 until 2015. The CBI detained him.

March 3, 2018 According to sources and investigative authorities, PNB officials received payments in the form of gold and diamonds to ensure the success of the scheme. On March 4, 2018, the CBI made a few additional arrests, including that of two former employees of Modi’s Firestar International, a group auditor, and a former director of one of Choksi’s businesses.

On March 6, 2018, the Serious Fraud Investigation Office (SFIO) was requested by the Corporate Affairs Ministry to meet with the MD and CEO of important lending institutions including Axis Bank and ICICI Bank in order to investigate the situation. Vice President of Banking Operations for the Gitanjali group, Vipul Chitalia, was detained by the CBI.

On March 7, 2018, SFIO representatives met Sunil Mehta, CEO of the Punjab National Bank. On March 8, 2018 Choksi accuses multiple authorities’ investigative efforts of treating him unfairly while conducting an ongoing probe. Interpol issued a Red Corner Notice against Nirav Modi on June 2, 2018 for money laundering.

On June 26, 2018, the Mumbai Court ordered Nirav Modi and Mehul Choksi to appear in court or risk being labeled fugitives under the special Prevention of Money Laundering Act (PMLA) Mehul Choksi is requesting the revocation of the non-bailable warrant (NBW) that was issued against him on June 27, 2018, which was heard before a special court.

On June 28, 2018, the External Affairs Ministry said that India has asked many nations to deny Nirav Modi admission. On August 3, 2018, the Indian government asked the UK to help extradite diamond magnate Nirav Modi. On August 20, 2018, Interpol UK notified the Indian government regarding Nirav Modi’s presence; as a result, the CBI and Indian government asked Interpol to place him under arrest.

On September 6, 2018, Interpol issued a Red Corner Notice (RCN) against Mihir R. Bhansali, a representative of the wanted diamond merchant Nirav Modi, in connection with the purported USD 2 billion PNB money-laundering case. Nirav Modi was accused of evading customs tax on the entry of diamonds and pearls on October 11, 2018, by the Directorate of Revenue Intelligence (DRI). As a result, Nirav Modi, the fugitive, is the subject of an order from the Chief Judicial Magistrate of Surat.

November 6, 2018: In conjunction with its money-laundering probe in the USD $2 billion Punjab National Bank (PNB) fraud case, the Enforcement Directorate grants 11 properties valued more over Rs 56 crores to fugitive diamond jeweller Nirav Modi in Dubai.

Mehul Choksi denied taking a 41-hour journey to go to India on December 25, 2018. But he requested to attend through video conference. On December 27, 2018, British officials notified India that Nirav Modi, an escapee, was residing there.

March 8, 2019 According to British daily media, absconder Nirav Modi is operating a new diamond company while residing in a luxurious flat in London’s West End. March 9, 2019 According to the ED, the UK government has forwarded a request for the extradition of diamond tycoon Nirav Modi to a UK court for further action.

After receiving a request from the Indian government via the UK Home Office, Westminster Court in London issued an arrest order for Nirav Modi on March 18, 2019. Nirav Modi was apprehended in London on March 20 after Westminster court issued an arrest warrant for the wanted diamond magnate. On March 29, 2019, a London judge denied Nirav Modi’s request for bail.

Where did it take place?

It had occurred inside PNB’s working environment. Because the PNB employees quickly processed the transaction upon request, it might be considered an internal transaction. They thus doubt the legitimacy of the PNB Letter of Credit scheme.

The two PNB workers avoided the core banking system (CBS), which handles daily banking transactions and broadcasts updates, and instead utilized SWIFT, a worldwide financial messaging service, to shift millions of dollars across borders each hour.

How many elements were there?

Credit letter of Engagements (which were faked) Network Swift

How did it take place

A failure in any of the banking systems, procedures, or personnel is referred to as operational risk (OR). At PNB, there had been a significant operational risk. For a considerable length of time, two PNB bank employees issued Letters of Credit to Nirav Modi without any kind of security, amounting to a fraud of Rs. 11,400 crores.

The rapid messaging system had been operating without using the underlying financial system. There is no effective internal coordination, and there is no internal procedure for control or monitoring. Operational risk is the effect of this.

Why is it a concern?

The internal financial system is poorly organized and is vulnerable to fraud. The sum of the scam is now PNB’s responsibility. While the bank has guarantee d to uphold all of its legitimate promises, the consumers are terrified that their money in the bank may be at jeopardy.

Modus Operandi

In general, there are clear guidelines on how to issue a Letter of Undertaking (LOU). When a firm in India requests trade financing in a greater amount, the bank’s senior authorities determine the credit limit before issuing a letter of understanding (LOU) and conduct a credibility check. What occurred in the instance of PNB has not, however, been made known.

The Maker, Verifier, and Authorizer are the three officials who participate in the three-layered procedure that sends a SWIFT message to the overseas branch. They all use distinct login names and passwords. It was a blatantly erroneous objective at Punjab National Banks, where the same individual handled all the tasks.

The Core Banking System (CBS) and SWIFT are connected to one another. Since SWIFT is connected to CBS, all of its clients’ data, including their transactions, transaction histories, and other information, are automatically stored in CBS. Regional managers, general managers, and, in certain significant circumstances, top management, may access this data.

When it came to the businesses owned by Nirav Modi and Mehul Choksi, however, those who were involved in the PNB scam tactfully disconnected SWIFT from CBS, allowing other businesses to connect via the CBS and SWIFT route. Therefore, money was purposefully sent to Nirav Modi and Mehul Choksi’s businesses without any documentation or evidence.

It is both usual and normal for CBS and SWIFT to be connected. The IT systems of all banks are connected in this manner. In PNB, it is therefore very odd that the information technology department was unable to recognize the system’s delinking in some instances. This blatantly exposes the guilt or flagrant negligence.[6]

A daily report of the enormous amount sent through SWIFT is typically generated by the system. However, it is very suspicious that the bank’s vigilance division, fraud commission, internal auditor, and external auditor all failed to notice this in the case of Modi and Choksi.

According to Mr. Rajnish Kumar, the chairman of SBI has made it clear that higher officials in the banking sector should not be kept in their positions for longer than three years. Some of the delicate positions are under very close observation.

However, one employee at the Punjab National Bank handled Nirav Modi’s transactions during their seven years in the same position. Therefore, it is obviously against PNB banking laws.[7]

The accepting bank will notify the issuing branch and its regional and zonal controlling offices when any Letter of Undertaking (LOU) issued by the bank is accepted by another bank. However, it is rumoured that accepting banks have provided confirmation; if so, why, then, has the confirmation receipt not raised any red flags for PNB?

Parties involved in the PNB scam and their role

• Gokulnath Shetty, the former assistant manager of PNB, was found to be at fault for giving Nirav Modi the Letter of Undertaking. Eight years ago, the fraud was first discovered.
• Manoj Kharat, who PNB hired as a single window operator in 2014, was found guilty of issuing unauthorized LOUs by using the SWIFT ID on behalf of two Belgian and Sydney-based banks.
• The unapproved Letter of Undertaking was sent to M/s Solar Exports, M/s Stellar Diamonds, and M/s Diamond R US. Through these businesses, the criminal’s gains were diverted to Nirav Modi and his family.
• The family of jeweller Nirav Modi includes his wife Ami, his brother Nishal, his sister Purvi, and their uncle Mehul Choksi. The PNB scam was blamed equally on the family members. His wife Ami is an American citizen, his brother Nishal is a citizen of Belgium, and Mehul Choksi, his uncle and business partner, is the Indian promoter of the Gitanjali Jewellery chain.
• The investigative agencies, including the Enforcement Directorate (ED), CBI, Income Tax Department, SEBI, and RBI, have worked very hard to find the fraud. Under the Anti-Money Laundering Act, the ED has taken possession of many of Nirav Modi’s real estate holdings. It has 45 locations and 15 cities included in its search routing.

The balance sheet of the Gitanjali Group of Companies’ India-based subsidies has also been examined by the CBI. The income tax division has also accused Nirav Modi of having hidden funds. PNB has received a warning letter from SEBI for holding off on disclosing information about the Nirav Modi scam.

Although the RBI has a supervisory function, this function does not include auditing banks. It is an internal control measure for the bank. However, PNB has received a comprehensive document from RBI for improving internal control. In response to the breach of the SWIFT operating guidelines, the RBI levied a fine of Rs. 2 crores.[8]

PNB gave a guarantee without any of these because if an ordinary person went to a bank and requested a loan, the bank would want income documents and collateral. Only unsecured credit cards and small personal loans are available. Why, therefore, would Nirav Modi reject any collateral?

The fact that banks provide both fund-based and non-fund-based facilities is another important consideration. Examples of fund-based financial services include bank loans, overdrafts, and other cash transactions. The bank does not deal with money or cash transactions in a non-fund-based banking transaction. Examples of this form of service include bonds, letters of guarantee, and letters of credit.

Furthermore, it was clear that PNB thought that Nirav Modi had received a direct loan from the foreign bank, with PNB only being liable for repayment in the event of Nirav Modi’s failure. As a result, from PNB’s viewpoint, it was never fund-based.

Aftermath of the PNB fraud

To stop any future abuse of the facility, the RBI issued a regulation on March 13, 2018, prohibiting banks from providing guarantees in the form of letters of undertaking (LOU). It has been determined that commercial banks should immediately stop issuing Letters of Understanding (LOUs) for trade-related loans for imports into India.

Additionally, by April 30 of this year, banks must link their basic banking systems (CBS) to SWIFT (the Society for Worldwide Interbank Financial Telecommunication). Nirav Modi was detained in London after an arrest warrant was issued for him on allegations of criminal conspiracy, cheating, dishonesty, fraud, breach of trust, and breach of contract.

Following the arrest of fraud suspect Nirav Modi in London, according to an article in the Economic Times, shares of Punjab National Bank increased by 4%. (ET Prime, March 20, 2019).

The impact on the banking sector

PNB’s stock has abruptly fallen in value on the stock market. As a result of the Rs 11,400 crore fraud discovered by the lender at one of its Mumbai branches, rating agency Crisil has also placed the Punjab National Bank’s ratings on ‘watch’.

The “largest bank plunder fraud in 70 years” in independent India, yet the government took no quick action after receiving a letter from whistleblower Hari Prasad to the Prime Minister’s Office (PMO) in 2016.

The scheme demonstrates PNB’s inability to manage risk appropriately. Two teams of auditors do an audit of PNB Branches. A concurrent audit is conducted in addition to the internal audit. (A concurrent audit is a timely, systematic assessment of bank financial transactions conducted on a routine basis to verify the accuracy of the transactions and adherence with regulations.)[9]

PNB’s credibility is questioned by global rating agencies Moody’s and Fitch. The bank is now under rating watch from Moody’s and Fitch’s, which is a type of thorough inquiry done before a potential rating downgrade or outlook reduction. The Baa3/P-3 local and foreign currency deposit rating as well as the Baa3 foreign currency issuer rating of PNB have been reviewed by Moody’s Investors Service.

The main reason for the downgrading is the review’s anticipated financial effect of the illegal activities. The possibility of deteriorating the bank’s standalone credit profile as a consequence of the discovery of many fraudulent transactions is the main motivator for today’s rating decision.

The banking industry has a significant impact on the stock market indexes NIFTY and SENSEX. Investors lose trust in their ability to invest as a result of this type of scam, and they begin to question the country’s business environment’s transparency. Investors’ general opinions on the nation’s financial industry have shifted.

The Indian banking sector’s strict rules and responses to these incidents have hampered trade financing. Customers were affected by this fraud because they demanded information about the whereabouts of the money they had deposited while the bank had given them reason to believe it would keep its promises. (2018) Tiwari Banks have also been harmed by the scheme.

The share prices of 34 of the 39 listed banks decreased between February 12 and February 15, 2018, while the benchmark BSE index decreased by 1.2%. Five banks, including Union Bank of India, SBI, UCO Bank, Axis Bank, and Allahabad Bank, were directly impacted by the scam because they provided PNB with short-term buyer’s credit.[10]

Laws designed to prevent bank fraud in India

Insolvency and Bankruptcy Code, 2016

This Code was passed to provide a single framework that could address issues relating to insolvency and bankruptcy. The creditor-in-saddle technique is the one used by IBC; in the onset, the experts with the interim resolution assume control of the management of the matters pertaining to corporate debtors. The accounts of those with NPA ties and wilful defaulters are excluded from the settlement process under this procedure.

Banking Regulation Act, 1949

The Reserve Bank of India (RBI) now has the power to command banks and to start the bankruptcy resolution process under the Insolvency and Bankruptcy Code (IBC) thanks to an amendment to this Act.

The Fugitive Economic Offenders Act, 2018

On April 21, 2018, this Act became operative. The Act was passed to stop economic criminals from fleeing the nation. This Act gives any special court the authority to seize all of the assets and property of criminals who are accused of defaulting more than Rs. 100 crores yet attempt to avoid justice by avoiding extradition to India.

The property of fugitive economic offenders is attached and seized in accordance with this Act. The Act also makes it possible for the perpetrator to be denied the right to defend any legal lawsuit.

The SARFAESI Act of 2002

It governs the securitization, reconstruction, and enforcement of financial assets. If the borrower fails to disclose his assets and a lender takes control of the mortgaged property within 30 days, this Act has been revised to add a provision for three months in jail. Six new Debt Recovery Tribunals (DRT) have reportedly been established, according to a government statement. In order to concentrate on matters of greater value in the fast-track courts, the minimum financial threshold for submitting a case in DRT was increased from Rs. 10 lakh to Rs. 20 lakhs in 2018.[11]

ID of the legal entity (LEI)

In an effort to combat and prevent financial fraud, the RBI has created the Legal Entity Identifier (LEI). The establishment of LEI was necessary because it is difficult to monitor a company’s transactions when money laundering occurs through a large network of businesses spread across various locations.[12]

Findings and recommendations

The fraudster has taken advantage of a few escape mechanisms in the financial structure. Along with this, RBI also contributes to keeping the financial system accurate and validated. The number of bank frauds has been rising year over year.

False motivational components set up for representatives, a plot between staff, corporate borrowers, and outside organizations, a weak administrative framework, a lack of appropriate devices and innovations set up to distinguish early warning signs of a cheat, a lack of familiarity with bank employees and clients, and a lack of coordination among various could all contribute to the fakes. One of the main motivations for cheating and NPAs has been identified as the delays in legal ways of declaring and many escape provisions in the framework.[13]

The Government of India may adopt the following measures to make sure that future instances of these kind of deals or scams are prevented.

Reform the financial industry: The banking industry and its lending practices must be addressed by the Indian government.

Due diligence: The Punjab National Bank authorities should have been made aware of this specific fraud long ago by the players involved.

Prior to engaging into a contract or agreement with another party, a reasonable firm or individual is required to do research or exercise care, or to operate with a specified degree of care. Although it may be required by law, the phrase is most often used in reference to volunteer inquiries. Therefore, the issue of why these Letters of Undertaking (LoU) were not subject to due diligence emerges.

Autonomy for the banking industry: The Indian government has failed to implement one of the primary long-standing requests of several experts that is autonomy for the banking industry. Independence is important for the obvious reason that the Government of India will often influence the hiring procedures of different public sector organizations.

Since the banking industry is involved in the credit business, they should have the autonomy to decide who they need to lend money to and to what extent.[14] In order for them to make decisions based on their ability for risk taking, the Government of India must provide them with the necessary autonomy or self-governance.

Independent specialized cadre: To enable early detection of such frauds, the government may want to consider creating an independent cadre of officers with both financial and legal expertise.

The government may think about creating this cadre in the near future using a group of commercial bankers, RBI, and CBI employees. The correct employment of a risk management people in all public and private sector banks is perhaps the most crucial course of action or advice in order to protect themselves from various forms of risk and to guarantee the early discovery of frauds.

Utilization of cutting-edge technology: To ensure successful implementation of the red-flagged account (RFA) and early warning signs (EWS) structure recommended by the RBI, which would aid in better profiling, the banks should make use of the best IT frameworks and information analysis currently available to clients by breaking down examples of their exchanges and rendering close continuous checking for banks.[15]

Conclusion

The need to update the regulatory framework and the corporate governance principles and practices of Indian Public Sector Banks has been made clear by frauds in the country’s banking industry. According to RTI statistics, 21 public sector banks in India stated that they collectively lost INR 25,775 crores due to bank frauds during the 2018 fiscal year.

However, a tremendous danger has been generated by the newly exposed massive scandal that affected the Punjab National Bank. 2018 (Pandya). With the use of a linear regression equation, the current research has created a method for forecasting non-performing assets. The model indicated that growing non-performing assets are a significant concern.

The predicted value may be useful to the RBI and other policy makers in estimating the likelihood of a bank’s long-term survival. Even while RBI has the authority to force banks, it is simply not practicable for a financial regulator to be everywhere at once monitoring fraud instances.

Commercial banks must act quickly to demonstrate compliance with RBI directives and to maintain strong oversight and control over their internal management. The industrialized nations are adopting organizations like asset reconstruction firms to address the issue of non-performing assets. Although it has had some success, RBI has also sought assistance from ARCs to address the NPAs issue.

In order to prevent economic criminals from avoiding the Indian legal system, the Modi administration adopted the Fugitive Economic Offenders Bill on March 1, 2018. This statute grants the government the authority to seize a fugitive’s assets. With careful respect for unreported transactions encompassed by the fraud, the goal of this critical research is to encourage additional investigation of PNB’s financials.

References:

[1] G. Singh, S. Srivastav, A. Gupta and V. Garg, “An Analysis of Financial Fraud through PNB Bank Scam and its technical Implications,” 2020 International Conference on Computation, Automation and Knowledge Management (ICCAKM), 2020, pp. 436-442, doi: 10.1109/ICCAKM46823.2020.9051500.

[2] ET Bureau, “PNB mega fraud: All you need to know in brief ”, Economic times, February 19, 2018.

[3] G. Singh, S. Srivastav, A. Gupta and V. Garg, “An Analysis of Financial Fraud through PNB Bank Scam and its technical Implications,” 2020 International Conference on Computation, Automation and Knowledge Management (ICCAKM), 2020, pp. 436-442, doi: 10.1109/ICCAKM46823.2020.9051500.

[4] ET Bureau, “PNB mega fraud: All you need to know in brief ”, Economic times, February 19, 2018.

[5] Upadhyay, D. (2019). Banking Scams in India. Journal of Banking and Insurance Law, 1(2), 7- 13.

[6] ET Bureau, “PNB mega fraud: All you need to know in brief ”, Economic times, February 19, 2018.

[7] Upadhyay, D. (2019). Banking Scams in India. Journal of Banking and Insurance Law, 1(2), 7- 13.

[8] Upadhyay, D. (2019). Banking Scams in India. Journal of Banking and Insurance Law, 1(2), 7- 13.

[9] ET Bureau, “PNB mega fraud: All you need to know in brief ”, Economic times, February 19, 2018.

[10] Sarkar, A. (2018, March 6). PNB Fraud Case: Axis Bank Discloses Rs 200 Crore Exposure To Nirav Modi, Gitanjali Gems Accounts. Bloomberg Qunit.

[11] Upadhyay, D. (2019). Banking Scams in India. Journal of Banking and Insurance Law, 1(2), 7- 13.

[12] ET Bureau, “PNB mega fraud: All you need to know in brief ”, Economic times, February 19, 2018.

[13] Abhirup Roy, Aditya Kalra and Euan Rocha, Reuters, “How PNB fraud happened: A 162- page report lays bare the lapses”, Livemint, June 21, 2018.

[14] Upadhyay, D. (2019). Banking Scams in India. Journal of Banking and Insurance Law, 1(2), 7- 13.

[15] Abhirup Roy, Aditya Kalra and Euan Rocha, Reuters, “How PNB fraud happened: A 162- page report lays bare the lapses”, Livemint, June 21, 2018.

This article has been authored by Sade Tejaswi, a student at National Law University, Visakhapatnam.