PNB Shares Fall After Internal Probe Finds Widespread Lapses

A 162-page internal report, produced by Punjab National Bank (PNB) officials tasked with probing the fraud, lays bare lapses that go far beyond a few branch officers. The report, a copy of which was reviewed by Reuters, lays out how failings by 54 PNB officials - ranging from clerks to foreign exchange managers, and auditors to heads of regional offices, allowed the fraud to be perpetrated. Eight of the 54 are among those who have been charged by the CBI for their roles in the scandal.

The report, which the PNB officials presented to the bank's fraud risk management arm on April 5, along with dozens of pages of annexed bank records and internal e-mails, is also part of the evidence submitted by CBI in its court case against those allegedly involved in the fraud.

PNB shares were down 2.7 percent and trading at 83.95 rupees at 11.41 am, underperforming both the broader Nifty index and the banking sector index.

Report spots anomalies

PNB investigators said the bank's international banking department and the IT division had delayed the integration work. They had also not complied with central bank advisories in 2016 calling for a comprehensive audit of SWIFT systems in use.

The PNB internal report also found that as a mid-level employee, Shetty should only have been able to approve transactions of up to Rs. 25 lakh ($37,000) without sign-off from more senior officials. But he had been given unlimited approval powers, the investigators said without explaining how this happened.

In the few weeks before his retirement in May last year, Shetty used his personal Yahoo e-mail address to send 22 e-mails -- 18 at around midnight -- to reconcile large forex transactions involving the Modi group. The use of personal e-mail was "overlooked" by the bank's treasury department, the report said.

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