IndusInd Bank’s Sunil Mehta in the eye of the storm, again?

Sunil Mehta’s name is appearing in headlines once again, with a section of investors raising concerns about his code of conduct as the bearer of the top office of a large bank. Currently serving as Chairman of Mumbai-based private sector lender IndusInd Bank, Mehta has worn many hats in the financial domain during his four-decades-long career, holding key positions across major financial institutions including SBI, Citibank, AIG and Punjab National Bank (PNB).

This comes at a time when IndusInd Bank has denied reports that PwC has submitted a report containing key findings in a matter related to suspected accounting irregularities to its board. According to an estimate, accounting discrepancies to the tune of Rs 2,100 crore may have potentially impacted 2.35 per cent of the bank's net worth.

Many experts have raised questions about Mehta’s involvement and functioning in the IndusInd Bank case.

Add Zee Business as a Preferred Source

A career spanning four decades…

As a career banker, Mehta has made strides across the banking, financial services and insurance (BFSI) space. He is a Fellow Member of the Institute of Chartered Accountants of India, and an alumnus of the Wharton School of Management, University of Pennsylvania, USA.

In fact, he was at the helm of Punjab National Bank when the country hit a historic low with the unearthing of the PNB fraud, back in 2018.

Mehta served as non-executive chairman of PNB from March 2017 to February 2020, according to his LinkedIn profile. It was during this period that saw the unfolding of the mega Rs 14,000-crore PNB scam.

Dubbed as the biggest fraud in the country’s banking history, the case sent shockwaves across Dalal Street, leaving investors in doubt about sound corporate governance across the domestic corporate world.

At the time, as non-executive chairman, Mehta described the PNB fraud a people failure and not a system failure.

The scam caused monetary losses to a number of banks, and led to a host of reforms and risk-management mechanisms in the financial space.

What was the PNB scam? How did it happen?

Bankers used fake documents at a Mumbai branch of the PSU lender that enabled the issuance of loans to overseas branches of other Indian banks for Nirav Modi and his uncle Mehul Choksi without proper collateral in place, bypassing PNB’s core banking system. Two PNB employees issued these documents, known as Letters of Undertaking (LoC), misusing the SWIFT messaging system—a global messaging facility that enables financial institutions to communicate with one another.

The scam unfolded after PNB filed a fraud report and lodged a series of complaints with the Central Bureau of Investigation (CBI)—the country’s top crime fighting agency, starting January 2018. The Modi-Choksi duo was found to have fraudulently secured guarantees to the tune of Rs 11,400 crore to obtain loans from the overseas branches, for the purpose of importing pearls.

The mega corporate fraud exposed the poor auditing standards within India Inc given the fact that it took the banking system almost seven-odd years to detect the financial anomalies and irregularities involved.

Several market voices had questioned Mehta’s conduct at the top helm of the PSU bank.