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RBI steps up efforts to prevent bank frauds
By TOG News Service
Mar 13, 2018

TOG News Service, NEW DELHI, MAR 13, 2018: THE Union MoS for Finance, Mr Shiv Pratap Shukla, today in Parliament stated that in light of a series of bank frauds recently, the Reserve Bank of India (RBI) had taken a number of measures to prevent banks from getting defrauded.

For starters, the RBI had established a framework for dealing with loan frauds of Rs 50 crores and above, under which banks would classify potential fraud accounts as red-flagged accounts, based on their observation & evaluation of early warning signals. Accordingly the banks would take time-bound action. Moreover, an online searchable database of frauds reported by banks had been created, in the form of Central Fraud Registry, to provide a tool for timely identification, control and mitigation of fraud risk and for carrying out due diligence during credit sanction process. Besides, the RBI had also issued caution advices, providing names of known fraudsters and their modus operandi.

Further, the RBI directed the re-verification of title deeds in respect of all credit exposures of Rs 5 crores and above by banks. It also issued various master circulars to banks, so as to restrict imprudent practices and at the same time, ensure sound procedures for conduct of business. The RBI also mandated that banks put in place adequate audit and compliance mechanisms with Board-level reporting through the Audit Committee of the Board. Further, the RBI undertook to review and supervise the systems and procedures in banks, as part of the Risk Based Supervisory framework for banks.