In a stern warning to bankers, the Finance Ministry has asked chief executives of public sector banks (PSBs) to check all NPA accounts exceeding ₹50 crore for fraud or they could face criminal conspiracy charges, according to official sources.
This missive comes in the light of the arrest of Bhushan Steel’s erstwhile promoter Neeraj Singal by the Serious Fraud Investigation Office (SFIO) for allegedly siphoning off funds.
IPC Section 120B
The sources said that bankers could be held accountable under Section 120B of Indian Penal Code if they fail to report fraud in an account which is later unearthed by investigating agencies, sources said.
If the investigating agencies find diversion of funds in those defaulting accounts, bankers may be liable to face criminal proceedings, the sources said, adding that this advisory is like an extra precaution to keep bankers from getting into legal tangles.
More than a dozen companies undergoing bankruptcy resolution are being reviewed by banks and investigating agencies for fraudulent activities, including diversion of funds.
Indian banks are facing mounting non-performing assets (NPAs) or bad loans, especially at PSBs, which have reached over ₹8 lakh crore. In addition, several banking frauds have been unearthed, including the ₹14,000-crore scam at PNB, carried out allegedly by diamond jeweller Nirav Modi and his associates.
A senior government official confirmed the development and said that some discrepancies have been pointed out in the case of a steel maker and a real estate firm among the nearly dozen companies.
“There were some inputs and lenders have been asked to provide transaction details of last five years. If required, banks will also undertake forensic audit,” he said.