THE HINDU Editorial Vocabulary- February 16, 2018 - Topic 1

Gem of a scam: On PNB fraud

A regulatory filing to the stock exchanges by Punjab National Bank has blown the lid off a Rs.11, 500-crore fraud. Perhaps the largest such scam in India, it was perpetrated by a maverick diamond merchant in collusion with bank officials at a single branch in South Mumbai. For India’s second largest bank to be defrauded in the manner suggested is astounding, especially since there has been heightened scrutiny of public sector banks’ operations in the last few years. 

The bank’s audit committees and boards, as well as the central bank, which conducts routine financial inspections of banks’ books, have been ostensibly keeping a close watch on the loans that have turned substandard or are on the verge of default. The government, which has often blamed the pile of bad loans on crony capitalism during the UPA regime, just last month unveiled a plan to infuse about Rs.1 lakh crore into 21 capital-starved public sector banks this fiscal. Of this, Rs.5,473 crore is to be injected into PNB. So even if the actual loss the bank ends up incurring on account of this fraud is half the stated amount, its capital adequacy ratio will be back to the same level before the recapitalisation was announced. Its market capitalisation has tanked Rs.8,077 crore over the past two days, with the share price falling over 20% since the news broke.

The bank’s top brass has said it has acted promptly, suspending around 10 officials. The Central Bureau of Investigation has booked one retired and one serving PNB employee so far. It is also difficult to believe that a handful of junior employees could orchestrate such a massive fraud. The bank’s managing director has claimed that supervisory lapses are being probed, and the Enforcement Directorate has initiated a money laundering case against the main accused, billionaire-jeweller Nirav Modi, his wife Ami Modi and close associates and relatives. The firms run by him had seen a meteoric rise and an IPO was in the offing after buyouts of global players and a ramp-up of retail presence in India and abroad. It appears that the bank employees who assisted in the fraud routed large transactions for the borrowers by circumventing the core banking solution. This flies in the face of the government’s push for a digital payment economy. PNB has sought to blame overseas branches of other banks for not undertaking due diligence before accepting such transactions, but that may be too simplistic an explanation. An inquiry by the RBI must get to the bottom of the systemic lapses in this affair and fix accountability across the chain of command. The banker-borrower nexus has been blamed for problems in the banking system for years. This episode will set off fears of a nexus deeper than imagined. The RBI and investigating agencies should act speedily to restore trust in the banking system.

Vocabulary

Blown: move creating an air current.

Example: A cold wind began to blow

Synonyms: gust, bluster, puff, blast, roar

Antonyms: nonmoving, breathing, unmoving, eupneic, eupnoeic

Lid: a removable or hinged cover for the top of a container.

Example: A large frying pan with a lid

Synonyms: cover, top, cap, covering

Perhaps: used to express uncertainty or possibility.

Example: Perhaps I should have been frank with him

Synonyms: maybe, for all one knows, it could be, it may be, it's possible

Perpetrate: carry out or commit a harmful, illegal, or immoral action.

Example: A crime has been perpetrated against a sovereign state

Synonyms: commit, carry out, perform, execute, do, effect, bring about

Antonyms:  baffle, come short, defeat, destroy, fail, frustrate

Maverick: an unorthodox or independent-minded person.

Example: A maverick among Connecticut Republicans

Synonyms: individualist, nonconformist, free spirit, unorthodox person

Antonyms: conventional

Collusion: secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others.

Example: The armed forces were working in collusion with drug traffickers

Synonyms: conspiracy, connivance, complicity, intrigue, plotting

Defraud: illegally obtain money from someone by deception.

Example: He used a false identity to defraud the bank of thousands of dollars

Synonyms: swindle, cheat, rob, embezzle, deceive, dupe, hoodwink

Astounding: surprisingly impressive or notable.

Example: The summit offers astounding views

Synonyms: amazing, astonishing, staggering, surprising, breathtaking

Antonyms: believable, credible, unimpressive

Ostensibly: apparently or purportedly, but perhaps not actually.

Example: Portrayed as a blue-collar type, ostensibly a carpenter

Synonyms: apparently, seemingly, on the face of it, to all intents and purposes

Substandard: below the usual or required standard.

Example: Substandard housing

Synonyms: inferior, second-rate, low-quality, poor, below par, subpar

Antonyms: standard

Orchestrate: arrange or direct the elements of a situation to produce a desired effect, especially surreptitiously.

Example: The developers were able to orchestrate a favorable media campaign

Synonyms: organize, arrange, plan, set up, bring about, mobilize, mount

Circumvent: find a way around an obstacle

Example: However, those inventive motorcyclists have managed to circumvent the obstacle

Diligence: careful and persistent work or effort.

Example: It's all just going to take diligence and persistence and we've got plenty of that.

Synonyms: conscientiousness, assiduousness, assiduity, hard work, application

Antonyms: changeableness, fickleness, idleness, inattention

Simplistic: treating complex issues and problems as if they were much simpler than they really are.

Example: Simplistic solutions

Synonyms: facile, superficial, oversimple, oversimplified, shallow, jejune, naive

Antonyms: complex