In a bid to eliminate the risk of fraudulent employee behavior, public lender Punjab National Bank has unveiled a new and improved credit approval process.
This step is initiated by the state-run lender in the wake of Rs 14,000-crore scam involving jeweller Nirav Modi.
“Instead of underwriting of credit being done by one employee, the process has been divided into four verticals with different employees doing separate components,” said an official from the bank.
Recently, the bank announced that it will be honouring all letters of undertaking (LoUs) and foreign letters of credit (FLCs) post its maturity. The bank in total issued around 1,590 LoUs worth Rs 14,000 crore.
The new lending mechanism launched by the bank will make a different set of employees handle sourcing, appraisal, processing and underwriting, documentation and disbursement of credit and the recovery part.
During the investigation process of the scam, the bank admitted that some of its employees fraudulently issued LoUs without adhering to the prescribed procedure.