With the loan books of public sector banks coming under scrutiny in the wake of the Syndicate Bank scam, top managements and even branches of state-owned lenders have decided to inspect all mid- and big-size loan books to ensure there are no discrepancies or unfair play.
Most banks have undertaken aggressive internal audits of their loan books and non-performing assets (NPA), as several bank frauds have been exposed.
The finance ministry has also said the banking system would be cleansed.
“We are looking into the issue, we will tighten the system and put in place a mechanism to increase accountability and transparency,” said GS Sandhu, secretary, financial services.
“Banks have undertaken scrutiny on their own and systems have been tightened to maintain quality and ensure there have been no lapses even in the past.In case any case comes to the notice of any official, he would have to report the incident immediately to the management," TM Bhasin, chairman, Indian Banks Association told HT.
The Central Bureau of Investigation recently arrested Syndicate Bank CMD SK Jain for allegedly accepting a bribe to enhance the credit limit of a private company.
On August 20, the finance ministry ordered forensic audits of the Oriental Bank of Commerce and Dena Bank for allegedly misappropriating Rs 436 crore of deposits belonging to private and public sector companies.
{{/usCountry}}On August 20, the finance ministry ordered forensic audits of the Oriental Bank of Commerce and Dena Bank for allegedly misappropriating Rs 436 crore of deposits belonging to private and public sector companies.
{{/usCountry}}Last week, a forensic audit was ordered into a few NPAs of UCO Bank as well.
“We are taking all necessary steps and we are carefully monitoring the assets,” RK Dubey, chairman and managing director, Canara Bank, said.
Banks would now have to indicate and highlight even those accounts that are performing as of now, but could be showing signs of stress.
This means that even if the borrower repays debt on time, she could come under the scanner if the bank notices early signs of uncertainty either in the company of the sector. The RBI has asked banks to classify such accounts as “special mention” accounts.