The government of the day cannot escape the responsibility for the Punjab National Bank fraud, according to former finance minister Yashwant Sinha.
"We cannot escape the responsibility that this scam took place when we have been in office for the last four years. It might have started earlier but why was it allowed to continue?" Sinha told BloombergQuint in an interview.
The Bharatiya Janata Party leader, who has been a vocal critic of the Narendra Modi government, said that "truth had become a casualty” in the political fight between the Congress and the BJP over the fraud.
On 14 February, India’s second largest State-owned lender disclosed that it had detected a $1.77 billion scam, linked to fraudulent ‘Letters of Understanding’ being issued via the lender. Investigative agencies have arrested twelve officials from the PNB as well as companies owned by the accused – Nirav Modi and his uncle Mehul Choksi, since investigations started. But Sinha said a fraud of this magnitude is unlikely to have been carried out only by employees.
This would not have happened without the involvement of the highest levels in the system. When I am talking about highest in the system, I am not excluding the political class from it.Yashwant Sinha, Former Finance Minister
He added that an independent Supreme Court-monitored inquiry was essential to ensure that those involved are punished. Sinha also said that while the banking system "lost much of its sheen" due to the fraud, he wouldn't advocate privatising government-owned banks.
I would not agree with the thesis that privatisation is a panacea for all the ills. We know that private sector banks have also been swindled and have indulged in fraud.Yashwant Sinha, Former Finance Minister
Industry body Assocham and industrialists including Godrej Industries Ltd Chairman Adi Godrej have called for the government to sell its majority control in public sector banks in the wake of the PNB fraud.
(This article was first published on BloombergQuint and has been republished with permission. Read the full interview here.)
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