'PNB fraud shows how banking system fails to detect it'

Taking a dig at the Centre, Trinamool Congress MP and the party's veteran leader Saugata Roy on Tuesday said the alleged $1.8 billion banking fraud showed how much the country's banking system failed to detect it early.

The Punjab National Bank had recently detected a $1.8 billion scam allegedly involving jeweller Nirav Modi and his uncle Mehul Choksi.

"Nirav Modi's case showed how much the country's banking system failed to detect it. Despite the presence of Reserve Bank of India and Union Finance department, the fraud was not detected early. I think a renewed thought should be applied to revive the banking sector," Roy said here on the sidelines of the event -- "Infra-East" -- organised by the Confederation of Indian Industry (CII).

The Central government has been recapitalising banks and infusing funds into the banking system but if huge capital is drained out, how can banks survive, he said.

"It is a matter of concern. There is a slippage from the government," he said, adding that the Central government must reveal how the alleged fraud was executed.

The banking fraud was unearthed when banks, particularly public sector lenders, are reeling under the growing non-performing assets, Roy said.

He indicated that lending to the infrastructure sector could be impacted in view of these problems.