The Finance Ministry has ordered a forensic audit of Dena Bank and Oriental Bank of Commerce after some of their Mumbai-based branches allegedly misappropriated funds worth Rs 437 crore, mobilised through fixed deposits.

Professional services firm KPMG in India has been given the mandate to undertake forensic investigations, sources close to the development said.

The report is expected in a month’s time.

In the case of Dena Bank, the misappropriation was to the tune of Rs. 257 crore and related to funds mobilised from seven corporates. In Oriental Bank’s case, it related to misappropriation of funds amounting to Rs. 180 crore, reportedly belonging to the Jawaharlal Nehru Port Trust.

The Central Bureau of Investigation is already looking into the alleged fraud.

The developments are disparate ones and took place at different times. But a common feature could be that they centred on mobilising deposits: fixed deposits/bulk deposits. The incidents have again brought to the fore the weak risk management systems in public sector banks.

“The persons responsible have been taken to task, some disciplinary action is being taken. There are also some suspensions, some transfers…,” said Financial Services Secretary GS Sandhu. He was speaking on the sidelines of a realty and banking conclave in Mumbai on Wednesday.

Sandhu added that the Finance Ministry would soon make it mandatory for all senior officers — Deputy General Managers and GMs — to undergo a compulsory risk management course before they are considered for promotions. He said these instances (of misappropriation) have happened at the lower/branch level because of lack of due diligence and non-adherence to norms or procedures.

SL Bansal, CMD of Oriental Bank, told Business Line in New Delhi that the bank had furnished the necessary information to the forensic auditor.

The incident in Oriental Bank of Commerce dated to February 2014 and the bank had swung into action early in March itself to nip the fixed deposit scam in the bud, said Bansal. Of the initial amount of Rs. 180 crore, as much as Rs. 110 crore was immediately recovered and handed over to the original remitter, he added.

Shares plunge

Dena Bank shares plunged 5.06 per cent to Rs. 60.10 on the BSE on Wednesday, while Oriental Bank shares tumbled 3.45 per cent to close at Rs. 264.50, after hitting a low of Rs. 261.

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