In a recent issue of its biannual Financial Stability Report, the Reserve Bank of India identified frauds as a problem confronting public sector banks. A significant number of frauds occur during the normal lending operation of a bank. This observation of RBI needs to be kept in mind when assessing the global arrest warrant issued by Interpol for Ami Modi, the wife of the economic fugitive Nirav Modi.
The couple fled around the time their collusion with bankers in PNB to commit fraud surfaced in 2018. Nirav Modi, who is presently in jail in the UK, is contesting India’s extradition request. It’s important for the government to relentlessly pursue extradition cases against not just Nirav Modi but also other economic fugitives. If they are not brought to justice, there will be no deterrence in place for frauds of the kind that took place in PNB. Given that the financial sector is dominated by public sector companies, it is the taxpayer who eventually pays the price of frauds.