April 5, 2018 / 1:04 PM / 6 months ago

Indian police question cenbank officials in $2 bln PNB bank fraud

NEW DELHI, April 5 (Reuters) - India’s police have questioned four senior central bank officials in relation to a $2 billion fraud at state-run Punjab National Bank, a federal police source said on Thursday.

The four Reserve Bank of India (RBI) executives included three chief general managers and one general manager, the source said.

It was not immediately clear what sort of questions were being asked by the federal police or whether there was any suspicion of wrongdoing on the part of the central bank officials. The RBI could not be immediately reached for comment.

In what has been dubbed as the biggest fraud in India’s banking history, two jeweller groups have been accused of defrauding banks by raising loans from overseas branches of Indian lenders using nearly $2 billion of fraudulent guarantees issued by rogue Punjab National Bank staff at a Mumbai branch.

The Reserve Bank of India has faced criticism that it failed for years to either detect the fraud, respond adequately to red flags in the banking system, or correct a breakdown of normal practices at the nation’s second-largest state-run bank. (Reporting by Aditya Kalra; Editing by Sanjeev Miglani)

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