How one man enabled India’s largest banking fraud


NEW DELHI, JUNE 26: An internal investigation carried out by Punjab National Bank (PNB) in the Rs 13,500 crore fraud involving diamantaire Nirav Modi has laid bare loopholes in the country’s banking system revealing how it took all of one man to enable much of the fraud.
Gokulnath Shetty who served as the Deputy Manager at PNB’s Brady House branch in Mumbai between 2010 and 2017, cleared 13,000 transactions, way above his authorised limit.
Shetty was entitled to pass cash transactions and transfers worth between Rs 10 lakh and Rs 25 lakh. However, during his 7-year stint at the branch, Shetty cleared as many as 13,501 transactions of Rs 1 crore or more, with the highest entry of Rs 212 crore in June 2015.
Shetty had full access to the bank’s software, taking use of which he verified his own large transactions – thus avoiding detection. “Further, it was noticed that in 2017, he was also the maker and checker of entries,” the report said. If the daily monitoring system reports were checked by his colleagues, the fraud could have been detected.
The probe team found Shetty sent at least 35 emails to the bank’s treasury division at its Delhi headquarters “outside” normal working hours – from 8 p.m. to 9.30 a.m. to inform about the transactions. Similarly, at least 22 of these emails were sent by him using his personal email ID. Incidentally, many of these transactions were related to Nirav Modi.
He also enjoyed patronage with bank seniors let him work at the Brady House branch despite being transferred thrice. His transfer orders were issued after his normal 3-year tenure at the branch ended on April 1, 2013, but he continued to serve there. On July 1, 2013, he was transferred to the PNB House branch. Five months later, he was transferred to the Foreshore Road branch but again, he did not move.
On July 1, 2015, a third order was issued to move him to the Opera House branch in Mumbai. Just 2 days later, he was ordered to be retained at Brady House. In each case, the Circle Office issued the order and changed it, “without containing any justification”, the report said.
Shetty moreover shared passwords for SWIFT transactions so that he could get others verify international payments when on leave, which was against the rules. (TNN)