PNB fraud: How blockchain can stop future 'Nirav Modis'
If blockchain technology was used for transactions and accounting, the fraud at state-owned Punjab National Bank (PNB) could have been prevented or at least detected earlier, said fintech experts. And now, more than ever, is a time when those in power should understand the need to implement blockchain technology in the Indian banking system.
This is because frauds are on the rise, especially in public sector banks. According to a Reserve Bank of India (RBI) report, sourced by Reuters through an RTI, state-run banks have reported as many as 8,670 "loan fraud" cases totalling Rs 61,260 crore over the last five financial years up to March 31, 2017.
And with the dust still settling over the Rs 11,300 crore fraud at PNB, an important point to ponder is how the technology used by the bank allowed its employees to bypass the internal system and carry out transactions by issuing fake letters for seven long years.
Diamantaire, Nirav Modi, against whom PNB has filed a complaint was allegedly helped by a former bank employee, Gokulnath Shetty. He was a deputy general manager in the foreign-exchange department in one of its branches in Mumbai.