New Delhi: RBI governor Urjit Patel Tuesday faced tough questions on the Nirav Modi scam when he faced a group of parliamentarians to brief them on the banking sector crises. The RBI governor was appearing before the parliament’s standing committee on finance headed by Congress’s Veerappa Moily, which includes leaders from several parties besides former Prime Minister Manmohan Singh.
Sources have told NDTV that the lawmakers grilled the regulator on the scale of the PNB (Punjab National Bank) scam that took place despite the Reserve Bank of India’s checks and balances and raised questions on the quality of monitoring.
On the panel’s agenda is to question the RBI chief on the impact of demonetisation and bad loans, specifically the Rs. 13,000 crore-PNB fraud.
Celebrity jeweller Nirav Modi fled India in January nearly a fortnight before PNB, India’s second-largest government bank, detected the fraud. Nirav Modi allegedly managed thousands of crores in loans he never paid back, using fake guarantees supplied by PNB officials at a branch on Mumbai. The billionaire, who has refused to return to India despite multiple summons by the CBI, is believed to be trying for political asylum in the UK.
Sources say a senior parliamentarian questioned Urjit Patel how Nirav Modi managed his illegal transactions for several years “despite the RBI’s supervisory norms”. Mr Patel was also asked who was accountable for the failure.
How were fake LoUs (Letters of Undertaking) going around for several years and why did the RBI fail to notice, Mr Patel was asked by MPs. “Why didn’t RBI check the credentials? RBI has powers to check and investigate every branch anywhere. Why didn’t it use the power?” the RBI chief was asked by a senior parliamentarian.
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