Finance Minister Arun Jaitley on Saturday slammed regulators for failing to detect the Rs 11,400-crore fraud at Punjab National Bank for seven long years, saying unlike politicians, regulators in the Indian system are unaccountable.
Speaking on the scam for the second time this week, he said employees conniving with fraudsters is worrisome. Also worrisome is that no red flag was raised. Regulators should have a "third eye" open to detect and check such frauds.
He said the industry needs to get into the habit of doing 'ethical' business as such frauds are "scars" and push reforms and ease of doing business to the background.
"Cases of willful default and bank frauds are much more than a business failure. If you periodically have incidents like these, the entire effort around ease of doing business goes into the background and these scars on the economy take the front seat. If a fraud is taking place in multiple branches of the banking system and no one raised the red flag, it is a matter of concern for the country," he said.
"Similarly, the indifference of the top management and multiple layers of auditing system which chose to look the other way has created a worrisome situation," Jaitley added.
Unethical behaviour in the lender-borrower relation has to end, he said. "If needed laws will be tightened further to punish delinquent persons."
He also slammed bank management for failing to do their job saying inadequate supervision and top management being unaware of what was going on in the bank was worrisome.
(With agency inputs)
Watch video: FM Jaitley slams regulators, auditors for PNB fraud