In order to eliminate the risk of fraudulent behavior by employees, the public lender National Bank of Punjab unveiled a new and improved credit approval process.
This step is initiated by the state lender following a scam of Rs 14,000 crore involving the jeweler Nirav Modi.
âInstead of credit underwriting being done by a single employee, the process has been split into four verticals with different employees performing separate components,â said a bank official.
Recently, the bank announced that it will honor all Letters of Commitment (LoU) and Foreign Letters of Credit (FLC) after they expire. The bank issued a total of around 1,590 LoU worth Rs 14,000 crore.
The new loan mechanism launched by the bank will ensure that a different set of employees will take care of sourcing, appraising, processing and underwriting, documenting and disbursing credit, and the recovery part.
During the process of investigating the scam, the bank admitted that some of its employees had fraudulently issued letters of intent without following the prescribed procedure.