Thursday, February 15, 2018

PNB Scam Explained In Detail By The Senior Chartered Accountant

Get Daily Updates In Email

PNB Scam Explained In Detail By The Senior Chartered Accountant

Would two representatives be truly able to evade a trusted managing an account programming to pull off Rs 11,400 crore trick? The way that a trick of such extent went undetected demonstrates the disappointment of different sorts of reviews in the bank, including the RBI’s examination, says a senior CA.

Image result for punjab national bank

The Reserve Bank of India needs to do a profound examination, scientific review of the records associated with the affirmed misrepresentation and furthermore make it obligatory for the banks to complete legal review, PS Prabhakar, Partner in Rajagopal and Badrinarayanan, a chartered accountancy firm, told IANS.

“Every fraud is a lesson for those who want to take it as a lesson.”

Image result for punjab national bank

“Broadly the kinds of audits or inspections that are carried out in Indian banks are statutory audit (carried out by auditors appointed by banks), concurrent audit (carried out by outside auditors at the bank branches), internal audit (carried out by bank staff) and the inspection by RBI,” says Prabhakar. He said that the statutory reviewer is for the most part, a test check evaluator or a review where exchanges are checked indiscriminately. Typically vast esteem exchanges ought to be checked and SWIFT framework exchanges ought to be painstakingly checked, he included.

Image result for punjab national bank

He further included that the typically vast esteem exchanges ought to be checked and SWIFT framework exchanges ought to be painstakingly checked. According to the PNBBSE, 11.97 %, the alleged fraud was carried out by two staffers by not entering the transactions in the bank’s core banking solution. In raising funds and moving money out of PNB, the two directly used SWIFT — the global financial messaging service used to move millions of dollars across borders every hour — and bypassed the core system which processes daily banking transactions and posts updates.

Image result for punjab national bank

Prabhakar said a Letter of Credit should normally be given only against receipt of security but it is not done in banks.

“The PNB case is just one bank and one branch. It is not known how many more banks and branches are involved in such transactions. The costs for the banks will be far less compared to their losses due to frauds.”

Partner at chartered accountancy firm GSV Associates, M.R.Venkatesh told IANS: “The alleged fraud in PNB is a failure of auditors –internal and statutory — and also of the regulator.”

He further added, “The sad part is that everybody involved in such frauds in India know that nothing would happen to them.”

Image result for punjab national bank

Rakesh Nangia, Managing Partner, Nangia & Co, “It is a failure of PNB’s internal checks and controls. I don’t know why the bank officials are given the discretion to enter the data in one system and not in the main system (core banking solution).”

According to Prabhakar, bankers should scrutinize carefully the gems, jewelry and real estate players before extending any facility to them.

Published by Harmisha Chauhan on 15 Feb 2018

No comments:

Post a Comment