THE HINDU Editorial Vocabulary- February 21, 2018 - Topic 1

A deeper malady: on PNB fraud case

Barely days after news of the Rs.11,500 crore fraud at Punjab National Bank broke, another but very different scam of a Rs.3,695 crore wilful loan default has surfaced. The Central Bureau of Investigation has registered a case against three directors of a Kanpur-based company, and others including unknown bank officials, on allegations of cheating a consortium of banks by siphoning off loans disbursed to the company. 

If the two cases must be compared, the similarities lie in the breakdown in internal control mechanisms and in the supervisory failure at the banks. In the case of Kanpur-based Rotomac Global, it had availed credit limits from a consortium of seven public sector banks. Given that the facility was made available from 2008 (in the case of Bank of Baroda, which filed the complaint with the CBI), and was used for a range of seemingly unrelated transactions including the import of gems and jewellery and the export of wheat, it is especially surprising that it took such a long time for this diversion of funds to surface as a criminal complaint. It is one thing for individual bank officials to have been complicit in the commission of frauds as has been claimed in the PNB case but quite another for supervisory cadre and risk detection and management systems to have delayed taking remedial action as they did in the Rotomac case. It took too long for the criminal complaints to be filed against the defaulters. On Bank of Baroda’s website Rotomac was listed as its top defaulter almost a year ago; the account had been classified as an NPA in 2015.

In the case of the Punjab National Bank fraud, letters of undertaking were issued bypassing the bank’s reporting system; the three-tier audit failed to detect the malfeasance. In contrast, BoB was not oblivious of the Rotomac default and took unconscionably long to act. It is important to determine why the Reserve Bank of India, which is vested with keeping an eye on bank books, was unable to take prompt corrective action in this case. Rather than routinely reiterate the importance of strengthening corporate governance in public sector banks and promising to infuse greater professionalism, transparency and accountability, it is time the Centre, the major shareholder in these institutions, takes serious steps to translate this intent into action. Any improvement in the functioning of the PSBs cannot be undertaken without empowering bank managements and securing their independence from political interference while enforcing strict accountability for lapses. To restore the depositor’s faith in the banking system, the government, the RBI and the judiciary must ensure that prompt and salutary action is taken. The economic cost of doing otherwise is too painful to imagine.

Vocabulary

Wilful: intentional; deliberate.

Example: Willful acts of damage

Synonyms: deliberate, intentional, done on purpose, premeditated

Antonyms: unvoluntary, obedient, involuntary, nonvoluntary

Allegation: a claim or assertion that someone has done something illegal or wrong, typically one made without proof.

Example: He made allegations of corruption against the administration

Synonyms: claim, assertion, charge, accusation, declaration, statement

Consortium: an association, typically of several business companies.

Example: I though I read that the cause of action was for some form of loss of consortium - of the husband, that is

Synonyms: association, alliance, coalition, union, league, guild, syndicate, federation

Siphon: draw off or convey (liquid) by means of a siphon.

Example: If straining methods do not adequately filter out the fine particles and sediment from the liqueur, try siphoning off the clear liquid.

Surprise: cause someone to feel mild astonishment or shock.

Example: I was surprised at his statement

Synonyms: unexpected, unforeseen, unpredictable, astonishing, amazing

Antonyms: anticipation, calmness, composure, coolness

Diversion: an instance of turning something aside from its course.

Example: A diversion of resources from defense to civil research

Synonyms: rerouting, redirection, deflection, deviation, divergence

Antonyms: ennui, fatigue, labor, lassitude, toil

Defaulter: a person who fails to fulfill a duty, obligation, or undertaking, especially to pay a debt.

Example: In a population of 4 million people, 500,000 individual defaulters are failing to meet their obligations in respect of activity determined to be criminal by the court.

Synonyms: deadbeat

Fraud: wrongful or criminal deception intended to result in financial or personal gain.

Example: He was convicted of fraud

Synonyms: fraudulence, cheating, swindling, embezzlement, deceit, deception

Antonyms: fairness, good faith, honesty, integrity

Unconscionable: not right or reasonable.

Example: The unconscionable conduct of his son

Synonyms: unethical, amoral, immoral, unprincipled, indefensible, unforgivable

Antonyms: moderate, conscientious

Intent: resolved or determined to do something

Example: The administration was intent on achieving greater efficiency

Synonyms: bent on, set on, insistent on, hell-bent on, committed to, obsessive about

Antonyms: inattentive

Strict: demanding that rules concerning behavior are obeyed and observed.

Example: My father was very strict

Synonyms: stern, severe, harsh, uncompromising, authoritarian, governessy

Antonyms: tolerant, variable, undemanding, inexact

Interference: the action of interfering or the process of being interfered with.

Example: He denied that there had been any interference in the country's internal affairs

Synonyms: intrusion, intervention, intercession, involvement, trespass, meddling

Antonyms: noninterference, nonintervention