Government Orders Forensic Audit Of Scam Ridden OBC And Dena bank

FinMin orders forensic audit of Dena Bank, OBC after reports of scam-Hindu Business Line

MUMBAI, AUG 20: 

The Finance Ministry has ordered a forensic audit after reports of misappropriation of FUNDS worth Rs. 436 crore at the branches of Dena Bank and Oriental Bank of Commerce.

Dena Bank was TRADING down 4 per cent at Rs. 60.70 on the BSE at 2.20 pm. Similarly, Oriental Bank of Commerce was trading down 4 per cent at Rs. 263.55 on the BSE in late afternoon TRADE.

GS Sandhu, Secretary, Ministry of Finance, said, “These are instances which have happened at the lower/branch level because of lack of due diligence and non-adherance to the norms or procedures…So (it is) not fair to term the entire banking system or the individual bank going in that direction.

“The persons who are responsible are being taken to task, some disciplinary action is being taken and there are also some suspensions, some transfers…The investigation is on and further action will be taken based on that,” Sandhu said on the sidelines of a Real Estate and Banking conclave by Naredco.

According to a report, a Mumbai-based branch manager of Dena Bank mobilised (using middlemen) fixed deposits (FDs) to the tune of Rs. 256.5 crore from seven corporates, while in the case of OBC, misappropriation of FUNDS to the tune of Rs. 180 crore was reported (which was deposited by an organisation as fixed deposit).

In the wake of rising scams in public sector banks, the Finance Ministry is looking at various steps, including strengthening of risk management, appointment of bank chiefs for longer tenures, separation of posts and better quality of nominee and independent directors.

According to Sandhu, “The most important part is strengthening of risk management. We are going to make it mandatory for all the senior officers in banks for officers of DGM (Deputy General Manager) or GM levels to undergo a compulsory risk management course before they are considered for their promotions for higher posts…We have already started work on this through some expert agencies.”

The issue recently came to light after the arrest of Syndicate Bank CMD Sudhir Kumar Jain by the CBI in a Rs. 50-lakh bribery case.

On the issue of extending loans to Bhushan Steel by banks, Sandhu said that it was a commercial decision by a consortium of bankers… and “they are capable of deciding what has to be done”.

The RBI Deputy Governor, SS Mundra, said, "There are instances of individual failures. We would look into it. The regulations are robust enough and such failures happen because regulations are not followed. We will continue to bring more sensitivity to the issue and take punitive action where necessary."