PHD Chamber Expresses Concern that PNB Fiasco might Impact Ease of doing Business
India’s leading industry Chamber PHD Chamber of Commerce and Industry has expressed concern over the crisis triggered in the banking industry post Punjab National Bank episode. PHD Chamber is surprised how the banks internal audit system failed to detect anomalies in transactions leading to the alleged fraudulent loans given out to the borrowers.
Blaming the systematic failure of the internal audit system, President, PHD Chamber, Mr. Anil Khaitan said, “The current situation is worrying for Indian industry since it may lead to unnecessary tightening of norms and procedures in raising capital from banks. This will in turn hurt the positive sentiment generated in ease of doing business and can potentially gravelly impact the policy.”
PHD Chamber has also made an appeal to the Reserve Bank of India (RBI) and the banking industry to ensure that genuine borrowers are not adversely impacted by this move. “What seems like a failure of a bank’s internal audit system and an isolated fraud as alleged should not be used to penalize genuine borrowers and their capital needs. The industry is on the threshold of a growth trajectory and any change in banking processes can have an adverse impact,” added Mr. Khaitan.
The PHD Chamber feels that instead of making changes in the loan seeking mechanism, stringent steps should be taken by the Central Bank to strengthen the banks’ internal audit procedures. It also appeals to the RBI to put in place technology driven norms and processes to ensure incidents like this one are not repeated and any loopholes in the system are plugged.