PM Modi promoted private diamond firms instead of PSUs: Anand Sharma

Congress said both wilful defaulters and entities which have committed bank frauds have raised the risk for the Indian banking system

The Congress on Friday accused Prime Minister Narendra Modi of "promoting" private firms which inked diamond purchase pacts with Russia in 2015 after "cutting out" public-sector units MMTC and Hindustan Diamonds.

Senior Congress leader Anand Sharma asked the prime minister to explain to the country "why he sidelined government-run entities and promoted private firms, some of which are facing investigation of defrauding banks".

He accused the prime minister and the finance minister of not being forthcoming and honest in their response on the issue of bank fraud by Nirav Modi and Mehul Choksi.

Noting that the situation in the banking sector is "very fragile", he asked the government to come out with a white paper on their state.

He said both wilful defaulters and entities which have committed bank frauds have raised the risk for the Indian banking system, which in any case "needs urgent recapitalisation but the government does not have adequate funds".

Sharma said that in December 2015, when Russian President Vladimir Putin came to India, "he (Modi) was personally present and helped in facilitating the signing of Diamond purchase agreements between 12 diamond companies, mainly from Gujarat and Mumbai, and Al Roza of Russia".

These companies also included Rosy Blue Group, which is being prosecuted for defrauding banks, he told PTI, and asked "what the prime minister has to say about the support that has been given to the promoters of Winsom Diamonds".

"All these details must come out. We are concerned as at that time also we had said that the government agencies and PSUs were negotiating for diamonds - MMTC and Hindustan Diamonds. These both PSUs were cut out and these private diamond entities were brought in.

"Let the government explain the reasons why it was done," he asked.

Sharma alleged, "The prime minister has been found wanting on the bank fraud issue. They are trying to distract the focus from the real issues. It seems the government is not serious about the action."

Training his guns on Arun Jaitley, he said, "It is strange that the finance minister has chosen to break his silence but has blamed the banks. The country wants to know what action has been taken. The information that has been given by the agencies misleads the people more."

The Congress leader also sought to know who has evaluated the assets that have been seized and attached.

The former union minister said public money needs to be secured and the Government of India and the Reserve Bank have a responsibility, both legal and moral, to assure depositors and citizens that their money is safe.

"The government should also immediately release a list of the defaulters and the status report on the action that has been taken, which must be submitted to Parliament when it reopens.

"The government must come out with a white paper on the state of banks and list of all wilful defaulters, together with a list of all bank frauds that have taken place in the last two-three years," he said, adding that it is important to know what has been its action and the losses incurred due to these two bank frauds and other such cases.