New Delhi/Mumbai: The centre has said the Rs 11,300 crore fraud at state-run Punjab National Bank was a "manifestation of supervisory failure" at the country's central bank, according to media reports on Monday.
In a letter to the Reserve Bank of India (RBI), the government said the failure to detect the fraud, the biggest ever in India's banking sector, raised questions about the central bank's "efficacy of supervision to detect and check systemic failure", NewsRise and other media reported.
"Either the framework designed by RBI to prevent and detect such frauds is inadequate or RBI is unable to ensure its effective implementation," they quoted the letter as saying.
Also read: PNB fraud: ED raids Nirav Modi’s Mumbai residence, seizes valuables worth Rs 5,716 cr
The RBI did not immediately respond to a request for comment on Monday, which was a holiday in Mumbai. A finance ministry spokesman declined comment.
Rajeev Kumar, the top government official overseeing banks, told Reuters in New Delhi the Finance Ministry had written to banks to take effective steps to avoid a repeat of a PNB-like fraud. Mr Kumar declined to comment if the government had written to the RBI.
But in among the first official response by the Finance Ministry, he said the Punjab National Bank will need to honour the "bonafide" transactions that have occurred through the bank's platform.
Also read: PNB fraud case: CBI summons Nirav Modi’s top official, seals Mumbai branch
The government action comes as police briefly locked down the PNB branch in south Mumbai that was at the heart of the scam and continued searches today to gather evidence. The bank would have been closed on Monday anyway because of the holiday.
A source at the Central Bureau of Investigation (CBI) said the branch was likely to resume operations tomorrow.
Besides searching the premises, the police also questioned more PNB officials today, the CBI source said, taking the total number of bank staff who have been questioned so far to 13.
Three people, including two employees of PNB, India's second largest state-run lender, were arrested and presented before a Mumbai court over the weekend in the case that involves billionaire jeweller Nirav Modi.
Police also questioned some executives from Nirav Modi's group, the source said.
The bank has said that the two employees arrested by police colluded with companies belonging to Modi and another jeweller Mehul Choksi, who heads jewellery retailer Gitanjali Gems Limited and other companies.
Also read: PNB scam: 200 shell firms probed, ED raids 45 sites
Jeweller Modi, whose clients include Hollywood stars such as Kate Winslet and Dakota Johnson, has not commented on the allegations. Police have said Modi and his family left India before PNB filed a complaint on the alleged fraud.
Choksi has also not commented, and police have said he also left India in January 2018.
