FinMin sets up new regulatory measures for big loans following PNB fraud

New Delhi: Swinging into action following the Rs 11,400 crore PNB fraud, the finance ministry on Friday set up new regulatory measures.

The ministry has written to Hong Kong branches of four Indian banks asking them to reconcile accounts and check for irregularities, news agency ANI reported.

The four lenders - SBI, Axis Bank, Allahabad Bank and Bank of India - were issued Letters of Undertaking (LoUs) by PNB's Mumbai branch.

Reconciliation of an account involves confirming whether the money leaving an account matches the amount that's been spent.

ANI also reported that the public sector banks will now appoint a special representative or agency to monitor status for all loans of above Rs 250 crore and that a consortium of lenders cannot exceed 7 banks. Incidentally, Rotomac pens owner Vikram Kothari is alleged to have cheated a consortium of 7 banks of Rs 3,695 crore.

Also read: Rotomac fraud: CBI arrests Vikram Kothari, son in Rs 3,695 cr loan default

A report in the Times of India said that these measures are effectively the first definitive steps taken by the finance ministry since the scam broke out, even as government agencies like CBI, ED and Income Tax department have cracked down on the accused.