MUMBAI: Former Reserve Bank of India (RBI) governor, Y. Venugopal Reddy has slammed the government for playing around the bush by targeting officials who helped in the multi-crore fraud at the state-run Punjab National Bank (PNB), while the main accused Nirav Modi has already flown ashore to avert his arrest.
In such a case, the government, as the owner of public sector lenders, it is answerable to taxpayer losses rising out of such financial scams, he said.
During a speech at the Shivaji University at Kolhapur on Saturday, Mr Reddy pointed out that the government should have thoroughly looked into the matter, and it is the government (owner) in the case of PNB scam, which stands to lose it all in the fraud that came to light a few months ago.
Mr Reddy also said that after all it is the common man, who will ultimately bear the brunt of the losses due to such banking frauds.
“The taxpayers, who have entrusted their money to the government-owned banks should be asking the government to explain why, as the custodian of their money, it failed to prevent the fraud,” Mr Reddy said.
The former RBI governor also alleged that the directors, who were responsible for looking over the banking operations to avert such frauds, should be questioned about their knowledge about such incidents.
They should explain why they failed to prevent the scam. “It affects depositors if a bank does not have enough money to pay them, that is, when the capital is not adequate,” he said. Bank deposits with the private sector, having adequate capital, continues to be as safe as they have ever been, he added.
“Public sector banks do not have adequate capital to take care of depositors’ interest, but since the majority ownership is that of the government, the deposits are safe. These are not limited liability companies, but institutions established under the law,” Mr Reddy added.
