Narendra Modi

Breaking his silence over the Rs 11,400-crore fraud at the India's second-biggest PSU bank, Prime Minister Narendra Modi today warned of stringent action against those involved in financial irregularities and said loot of public money will not be tolerated.

Days after the Punjab National Bank (PNB) fraud -- allegedly masterminded by diamantaire Nirav Modi -- came to light, the prime minister asked the management of financial institutions as well as the supervisory bodies to do their job diligently to check such frauds. "I want to make it clear that this government has been taking strict action against financial irregularities and will continue to take strict action," he said at Global Business Summit organised by the Economic Times. "System will not tolerate loot of public money," the prime minister said.

Nirav Modi, whose diamond creations have draped Hollywood stars such as Kate Winslet and Dakota Johnson, and firms linked to him are alleged to have acquired fraudulent letters of undertaking (LoUs) from one PNB branch in Mumbai between 2011 and 2017 to obtain loans from Indian banks overseas. Investigative agencies have raided Modi's properties and arrested bank employees and persons linked to his firms. Without naming the alleged kingpin of the fraud, billionaire jeweller Nirav Modi, and PNB, the prime minister said the management of financial institutions, auditors and regulators should perform their duty earnestly.

"I want to make an appeal to those who have been entrusted with the job of framing rules and policies and maintaining ethics to do their job faithfully and diligently," he said, adding this should specially be followed by those who have been given the responsibility of supervision and monitoring. With captains of industry in audience, Modi hard sold his government's economic agenda which he said was "job oriented" and aimed at bringing "people centric growth." He also mentioned about the announcements made in his government's last full-year budget, including pro-agriculture steps like paying farmers a price that is 50 per cent more than the cost of production.

"Some economists are speculating about price rise (because of this decision). These economists must also consider about our duty towards our 'annadata' (referring to farmers)," he said. "I feel we should support every decision taken to increase farmer's income."

The industry, he said, should contribute to the decisions taken by the government. "In last four years, the government has stressed on job centric, people centric growth; (and focussed on) an economy which gives poor financial inclusion and takes care of middle-class aspirations." The prime minister said India has turned around in last four years from being put in five most fragile economies globally few years back, and the country is now being seen as growing to a USD 5-trillion economy soon.

It has done well on all macro-economic parameters, be it inflation, current account deficit, fiscal deficit, GDP growth, interest rate and FDI, he said. "India is performing well on all economic aspects," he said, adding FDI inflows have crossed USD 209 billion during last four years. The share of India in world GDP increased from 2.4 per cent in 2013 to 3.1 per in less than four years. It now contributes 21 per cent to the global growth with just 3 per cent share in the world economy, he said.

The change, he said, was made possible only because of a shift in work culture and by shunning old practices. Speed and scale bundled with sensitivity led to success, he said.

India is one of the most open economies in the world now and also one of the world's favourite FDI destinations, he said. The prime minister said the roll out of the Goods and Services Tax (GST), which converted the country into one market one tax has led to better tax compliance and revenue generation. It has helped bring 1 crore entities under tax net post GST from 60 lakh earlier. On falling exports, Modi said the Special Investigation Team (SIT) on black money in its report had stated that there is a serious problem of over-invoicing in import and export. "After getting this report, the government took stringent steps to deal with over invoicing."

"Today, for economists it is a subject of study that why there was a similar fall in import and export without any big change in trade deficit. What were the reasons - over invoicing or base correction?" he asked.

The government has taken stringent steps to address issue of over-invoicing and signs of improvement in export numbers are visible, he said. Modi said when the NDA government came to power, it inherited twin balance-sheet problems and crony capitalism was entrenched in the system. The insolvency and bankruptcy code reform was done to get banks freed from NPA menace, he said.

He went on to list his government's unqiue initiatives - from coating urea with neem to opening zero-balance Jan Dhan bank accounts to bring poor in formal system; from bring down price of stents used in heart surgery to the new healthcare scheme announced in the Budget for providing insurance cover of Rs 5 lakh per annum to 10 crore poor households to cover for cost of treatment of serious ailments. He said 'Speed, Scale, Sensitivity' is needed for policies to reach people.

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Narendra Modi vows to punish PNB fraudsters

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