BoB forex scam incident not reflection of systemic problem: Sinha

New Delhi: The government Wednesday said the alleged Rs 6,100-crore Bank of Baroda black money remittance case is one off incidence and not a reflection of any systemic problem in the banking sector.

"We tried to understand whether this (BoB) incident represents any systemic lapses, whether there are gaps and processes that need to be closed, gaps in talents need to be closed.

"We have taken some action in those areas but overall there was a sense that there is not anything systemic in our financial system and we need not be unnecessarily concerned about," Minister of State for Finance Jayant Sinha said after a three-hour long meeting with heads of PSU banks here.

He further said the meeting discussed three-four action points to avoid recurrence of such incidence.

"One of the action points was that we need specialised expertise in surveillance and analytical algorithm, and IBA is working on that," he said.

Besides, he said banks will follow the benchmarking with standards set by RBI and organisational restructuring wherever required.

Earlier this month, CBI, SFIO, tax authorities and the Enforcement Directorate started investigation on the BoB matter. It is alleged that Rs 6,172 crore black money was remitted from Bank of Baroda to Hong Kong camouflaged as payments for non-existent imports like cashew, pulses and rice.

It is also alleged that amount was deposited in 59 accounts of the bank's Ashok Vihar branch (New Delhi) in cash as advance for import and the money was sent to some selected companies in Hong Kong.

Emphasising that all banks have a very high quality systems in place, Sinha said "significance surveillance is going on, analytical analysis of banking transaction is going on. What has happened with Bank of Baroda was not a systemic matter but one of the matter."

As far as financial sector is concerned there are always ways in which people try to subvert system, he added.

On the strengthening of governance in public sector banks, Sinha said the government wants to ensure that banks have absolutely best practices.

"We went through issue of surveillance and control as well as oversight. All those matters were thoroughly discussed. There were several actionable items that were taken by IBA and in the next meeting will review them," he said. 

Sinha said the the government is vigilant as far as governance is concerned.

"Obviously as far as non official directors are concerned, board oversight is concerned, we have completely revamped and put in place very qualified people. All those issues that have existed in the past of not having qualified people, directors not coming are being addressed," he said.

With regard to proposal to bring down government's stake in IDBI Bank, Sinha said, it is work in progress.

"As far as IDBI Bank is concerned, the Finance Minister has laid out what the direction is going to be. We are continuing to work as far IDBI Bank is concerned" he said.

Banks were requested to give the progress on different subjects post Indradhanush. It is the most comprehensive reform announced on August 14 for transforming public sector banks.

It was also decided that the next 'Gyan Sangam' will be held in January 2016.