Post PNB fraud government tightens grip on PSUs

As the banking frauds in the country get bigger day by day, government tightens new norms against PSUs. The government's response to the situation indicates that PSUs are showing signs of chaos.

In a recent announcement, the finance ministry asked PSUs to follow two major directives. Firstly, the banks are given the deadline of 15 days for identifying gaps in the banking system to address the technological risks. The banks are directed to put forward a blueprint to enhance preparedness for combating posed risks. Also, they need to follow the best practices in the banking system to identify the weakness in their existing system.

Secondly, the finance ministry has directed all PSUs to examine NPAs above Rs. 50 crore as a possible fraud. The ministry has asked banks to involve ED ( enforcement Directorate) and DRI (Director Of Revenue Intelligence) for any violations of the Prevention of Money Laundering Act.

Through these directives, the government aims to bring back trust and stability to the banking system which has been jolted by the recent frauds. Also, currently only PSUs have come forward stating the frauds committed at their end if private sector banks also come under the regulator's scanner, and such blatant frauds are detected, there would be further deterioration in the banking system.