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Terming the alleged fraud in Punjab National Bank as “a case of operational risk”, the Reserve Bank of India on Friday insisted that it will take appropriate supervisory action after the lender admitted that it had detected fraudulent transactions worth over Rs 11,300 crore involving jewellery czar Nirav Modi.

“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,” the central bank said in a statement.

The RBI also denied a report that PNB had been asked to assume all liabilities arising from the fraud. “There have 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. RBI denies having given any such instructions,” the RBI clarified.On Wednesday, State-owned PNB, in a regulatory filing to the Bombay Stock Exchange, said it had detected fraudulent transactions worth over Rs 11,000 crore in its mid-corporate branch in south Mumbai. Two days later, evidence emerged that as many as 17 banks lent about Rs 3,000 crore additionally to various firms of Nirav Modi, including his flagship firm Firestar International Ltd.

A total of 18 PNB employees remains suspended as of now as the internal investigation of the bank is currently underway.