Mumbai, February 17, 2018

Regulatory probe into the alleged Rs 11,400-crore fraud at Punjab National Bank is gaining momentum.

While market regulator Sebi has launched a probe into trading and disclosure related issues in connection with PNB and Gitanjali Gems, the Institute of Chartered Accountants of India (ICAI) will examine whether there have been lapses on the part of auditors.

Sebi and the stock exchanges have begun analysing the trade details of all entities associated with Nirav Modi, including Mehul Choksi, who is already under the scanner for various cases, including a brokerage default incident.

Sebi and the exchanges are also probing Choksi and his listed entity Gitanjali Gems for any disclosure lapses.

The ICAI, the apex body of chartered accountants, has sought information from investigation agencies as well as from Sebi. ICAI president Naveen N. D. Gupta told PTI it has taken suo motu (on its own) cognisance of the alleged fraud at PNB and its financial reporting review board (FRRB) has been advised to review PNB and Gitanjali Gems.

The board, set up by the institute, reviews compliance with various accounting and auditing standards.

The institute has written to PNB, Sebi, the Enforcement Directorate and the CBI, seeking information .

According to the ICAI website, the FRRB restricts reviews to published general-purpose financial statements only and its work would not be verification of the entire audit.

Meanwhile, the Reserve Bank said on Friday it had undertaken an assessment of the control systems at scam-hit PNB and will take "appropriate supervisory action".

"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," it said in a statement.

"The RBI has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action," it added.

The RBI also denied media reports that it had directed PNB to meet its commitments under the letters of undertaking to other banks.

[The Telegraph]