A much scarier thought

On this Punjab National Bank scandal, it does seem simple enough to understand what happened. But, that is worrying. If it was reasonably simple, why did it go undetected? It is not unreasonable to assume that several could be on the take – cutting across banks, auditors, the regulator, governments, etc. We live in a cynical world.

But, that is low probability because it is risky to involve too many stakeholders. Someone could spill the beans, if not out of altruism and morality but out of pique, let us say, because the spoils were not shared ‘fairly’. Yes, there could be moral considerations in immorality!

A scarier thought – scarier than the possibility of multiple layers and cross-sections of involvement – is that simply no one bothered to notice or do their job. The mind-numbing possibility is one of pervasive and deeply ingrained indifference and sloppiness. In other words, no one cared or cares any more!

Hence, it was scary to read that someone actually mentioned this as the possible reason for the scandal remaining undetected:

The accounts given by current and former executives who spoke to Reuters suggest an answer as simple as it is alarming: no one was paying attention. [Link]

This does not augur well for the integrity and unity of the country at all because it could be pervasive – yes, not within the banking system alone. Why should other sectors be different?

[Postscript: If the bank issued LoU to foreign banks (or, foreign branches of Indian banks, I presume that they would credit PNB’s Nostro account held with them before PNB credits the account of the borrower with the money. If I am right, why did the audit of PNB’s Nostro Accounts not spot the ‘unusual’ transactions? Why did anyone not raise a flag? Are these stupid questions? Perhaps.]

4 thoughts on “A much scarier thought

  1. Actually, “no one cared” is in my view not the worst case scenario. “Everyone is complicit” is probably a far worse possibility in this entire case given the facts that are coming out now with not just PNB, but also other banks and Government departments (scam with TDS, Taxes, EPF etc.)


  2. The downside of the word called “Jugaad” which for some strange reason has taken on a positive connotation in western lexicon representing “can do” attitude of Indians. Rather in a simplistic sense, it is circumvention of due process and procedure to get things done. Along with Jugaad, many a times in an Indian context, people add “ho jayenga” literally ‘it will be done’ as a way of postponing things like reconciliation to the future. You put the two together and then it is not insurmountable to think of the “scary thought”, the whole thing kept on going as nobody thought it worthwhile to ‘dig up the past’, using a Hindi expression “gade murde ukhadna” and let things pester till they blew up. From practical experience I have come across promoters who just do not get the risk they are taking and many a times brush aside leverage related question with – my CA says he will take care of it. Hopefully this episode and the attention it is getting will result in some good and a clean up of weak systems and processes.


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