RBI denies media claims about instructions to PNB to meet commitments under LoU
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Mumbai, February 17: The Reserve Bank of India has rejected the media reports that it directed the Punjab National Bank to meet its commitments under the Letter of Undertaking to other banks.
In a statement released yesterday the apex bank has denied having given any such instructions.
The RBI said the fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls.
Here is RBI statement
RBI’s statement on fraud in Punjab National Bank
There have been reports in the media that in the wake of fraud involving a sum of USD 1.77 billion that has surfaced in Punjab National Bank (PNB), the Reserve Bank of India (RBI) has directed PNB to meet its commitments under the Letter of Undertaking (LOU) to other banks. RBI denies having given any such instructions.
The fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls. RBI has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action.
Signed by -Jose J. Kattoor
Chief General Manager
The apex bank said it has already undertaken a supervisory assessment of control systems in the PNB and will take appropriate supervisory action.
The media reports said that the RBI directed Punjab National Bank to pay the entire 11,300 crore rupees owed to counterparty banks in the alleged fraud involving jeweller Nirav Modi, as not doing so could lead to turmoil in the financial markets.