Letter to BS: For PSU banks, prevention of frauds is better than cure

This refers to Anup Roy’s report “PSU banks more prone to frauds, says RBI’s financial stability report” (June 27). There is no denying that most of these public sector banks (PSB) would be found abjectly lacking when it comes to internal controls/audit mechanism, work ethics and professional attitude, besides the near absence of risk appetite (with their hands virtually tied at their backs) vis-a-vis their counterparts in the private sector. No wonder the Reserve Bank of India’s 17th Financial Stability Report of June 2018 goes on to make some highly scathing remarks about their ability to prevent frauds such as those that have rocked the country.

The observation, “In terms of the relative share of frauds, public sector banks have a disproportionate share of over 85 per cent, significantly exceeding their relative business share of about 65 to 75 per cent”, tells the real story. This also points at a sort of nexus between the erring staff of the lending banks and the loan seekers as was the case with Punjab National Bank. One needs to identify the real causes by incorporating some sort of auto-detection mechanism of all such transactions. These banks must also take due note of the highly enlightened path suggested in this report to be able to wriggle out of their current predicament before it is too late. Since prevention is always better than cure, the ball lies in the court of the fraud-affected PSBs. They should rise to the occasion, more so when they are vested with the onerous responsibility of safeguarding public money.

Kumar Gupt, Panchkula

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