The talk of India's banking sector plunging into financial crisis is no different as a "scare tactic", as the fraud in the case of Nirav Modi only matched the country's "solid" banking sector, BSE, for three days. CEO Ashish Chauhan has said here:
India's second largest state-owned lender, Punjab National Bank (PNB), was the largest Bank robbery hit the country in the amount of more than 1
A special CBI court has issued non-bailable arrest warrants against Nirav and his uncle Mehul Choksi.
At the Massachusetts Institute of Technology (MIT) students at The Bombay Stock Exchange's (BSE) chairman, Chauhan, said yesterday that India's banking sector is quite strong and regulated.
In fact, the amount of fraud being talked about in the PNB case is only three days of interest to the country's banking sector, he said. Chauhan said, however, that the scandal would not have happened if appropriate reforms in the banking sector including RBI had been taken after Harshad Mehta's cheating in 1992
"We had to reform the banking sector in 1992. This (Nirav Modi scam) would not have happened If we had done the reforms back then, but now we're awake, we're doing a good job, one is demonetization, the other is the GST, and the third is the bankruptcy code, "Chauhan told the participants in the one-day ground-breaking conference Innovation. Chauhan said the size of the Indian banking system is "Rs one crore crore".
"In India, we (banks) demand 12% of people who borrow every year, and we only give people who lend money to banks four percent, and basically, the banks earn eight percent (profit)." at Rs one crore core, how much interest do you get in one year at 12 percent? Rs 12 lakh crore. How much would you get in a month? Rs a lakh crore. How much would you get in three days? Rs 10,000 crore. How big is the scam of Punjab National Bank? It's a three-day interest of the Indian banking system that will take care of it (fraud), "said the BSE boss.
It happens, it's a commercial thing, if they (banks) make eight percent profit margins, they go away one out of twelve men will be a defaulter, and yet they would be alright, they will repay the principal One of those 12 guys this year has to retire, Chauhan said.
"This (Nirav) guy has been in default for 10 years. That's how effective it is 1/10 of the banks. The banking industry is actually working on it. They think it's public money. You have already taken the money out of you by not paying the interest.
"Effectively, there is nothing (fraud) .It's scary, the banking sector in India is so solid, it's over-regulated just to make sure that enough money is available, if anything," Chauhan said.
"This kind of scam gives (banks) enough ammunition to get more money out of you, instead of four you get three percent (interest on deposits), and if you want to borrow, you get only 15 percent instead of 12. So 'Do not panic, it's the other way round,' added Chauhan