RBI denies giving instuctions of issuing LoU to PNB for other banks

Reserve Bank of India has denied of giving any instruction of issuing Letter of Undertaking (LoU) to Punjab and National Bank.

 There had been reports in the media that in the wake of fraud involving a sum of USD 1.77 billion that has surfaced in Punjab National Bank (PNB), the Reserve Bank of India (RBI) has directed PNB to meet its commitments under the Letter of Undertaking (LOU) to other banks, an RBI said in a statement.

The fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls.

RBI has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action, it  added.

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