RBI

RBI’s statement on fraud in PNB-No instruction given to PNB to meet its commitments under LOU to other banks

RBI’s statement on fraud in PNB-No instruction given to PNB to meet its commitments under the Letter of Undertaking (LOU) to other banks.

Reserve Bank of India (RBI), in a statement issued yesterday has denied having directed PNB to meet its commitments under the Letter of Undertaking (LOU) to other banks. RBI categorically RBI denied having given any such instructions.

RBI has rebutted the reports in the media that in the wake of fraud involving a sum of USD 1.77 billion in Punjab National Bank (PNB), the Reserve Bank of India (RBI) has directed PNB to meet its commitments under the Letter of Undertaking (LOU) to other banks. 

The RBI clarified that the fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls. RBI has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action.

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