Reserve Bank of India (RBI) has issued guidelines for
the formulation of Best Practices Code (BPC) by banks
to prevent frauds. The norms have been issued to bring
about a certain minimum level of uniformity with regard
to the content and coverage of the code.
BPC modelled by select banks lacked uniformity in their
content and coverage and was not prepared as envisaged
by the Mitra Committee (on legal aspects of bank frauds),
prompting RBI to issue these norms, RBI said yesterday
in a notification to banks.
As per the norms, the BPC should be a comprehensive and
homogeneous document and take into account the instructions
relating to the common fraud prone areas and their prevention
issued to banks by RBI from time to time, the notification
Code should also highlight the recommendations of the
Ghosh Panel and the Mitra Committee. It should take into
account relevant recommendations of Narang Committees
study of large value frauds, Narasimham Panel on banking
sector reforms and recommendations of the estimate committee
on prevention of frauds in banks.
Code should cover all the functional areas like cash,
safe custody of other valuables, deposit accounts, investment
portfolio, credit portfolio, foreign exchange transactions
and treasury operations. The BPC may also incorporate
practices that would help prevention of losses to its
customers and include suitable guidance to such customers.
BPC should be periodically revised and updated in the
light of the experience gained, fresh instructions from
the RBI and suggestions made by internal/external auditors.
The BPC should take into account the instructions of the
Central Vigilance Commission, if any, issued from time