A forensic audit has been ordered by the Finance Ministry on Dena Bank and Oriental Bank of Commerce (OBC) following reports of misappropriation of funds to the tune of Rs.436 crore from fixed deposits received from customers.
“A forensic audit has already been ordered and some suspensions have already been initiated in this regard,” G. S. Sandhu, Secretary, Financial Services, Ministry of Finance, told presspersons on the sidelines of a Real Estate and Banking conclave organised by NAREDCO here on Wednesday.
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Investigation into the matter was on and further action would be taken on the basis of the findings of the investigation, he added.
However, Mr. Sandhu said this was an aberration at an individual level and was “not systemic. These instances have happened at the branch level due to lack of due diligence and non-adherence to norms or procedures.”
Media reports had alleged that the officials at the banks had misappropriated the funds received as fixed deposits. The amount in question at OBC was Rs.180 crore and at Dena Bank Rs.256 crore.
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The country’s banking system has been under pressure following the recent arrest of Syndicate Bank’s chairman and managing director on charges of corruption. He is alleged to have received a bribe to extend the credit limit of Bhushan Steel and Prakash Industries. The bank’s CMD as well as the promoters of both the companies have been arrested.
In the light of these developments, Mr. Sandhu emphasised the issue of risk management, saying that in public sector banks, deputy general manager and general manager rank officers would have to undergo risk management training to be considered for promotions. According to him, the other steps to be taken are longer tenures for bank heads and a better quality of nominee and independent directors on bank boards.
Speaking on the occasion, S. S. Mundhra, the newly appointed Deputy Governor of Reserve Bank of India (RBI), said “these are instances of individual failures. However, there is a process and we will certainly look into it. The regulations that we have are robust but such things happen if the regulations are not followed.”
Stocks reactOn the Bombay Stock Exchange on Wednesday, stocks of Dena Bank reacted by 5.06 per cent to close trading at Rs.60.1 while that of Oriental Bank of Commerce closed at Rs.264, down 3.45 per cent.