Reserve Bank of India has rejected the media reports that it directed the Punjab National Bank to meet its commitments under the Letter of Undertaking to other banks. In a statement, it has denied having given any such instructions. The RBI said the fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls.
The apex bank said it has already undertaken a supervisory assessment of control systems in the PNB and will take appropriate supervisory action.The media reports said that the RBI directed Punjab National Bank to pay the entire 11,300 crore rupees owed to counterparty banks in the alleged fraud involving jeweller Nirav Modi, as not doing so could lead to turmoil in the financial markets.
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