RBI tells banks to tighten anti-fraud measures

Taking note of the increasing number of frauds in banks, particularly in housing and mortgage loans, the Reserve Bank of India RBI on Wednesday asked the special committees of the banks, chaired by their chief executive officer, to take responsibility for the fraud investigation ''in a pro-active manner''.

In a notification issued from in Mumbai, the RBI said the incidence of frauds in the banks has been showing an increasing trend over recent years, both in terms of number of frauds and the amounts involved. "It has been observed that the trend is more disquieting in retail segment, especially in housing and mortgage loans, credit card dues, Internets banking, etc," it said.

Moreover, it is a matter of concern that instances of frauds in the traditional areas of banking such as cash credit, export finance, guarantees, and letters of credit remain unabated, it said.

The central bank has asked banks to build up a data or information pool of large-value frauds, and analyse them periodically. This may act as a knowledge repository for policy responses, it said.

The central bank has also said that in the matter of fraud investigation, banks may take immediate steps to identify staff with proper aptitude and provide necessary training to them in forensic audit, so that only skilled staff is deployed for investigation of large-value frauds.

It said the Board for Financial Supervision has expressed grave concern that fraudsters with the involvement of bank officials could engineer a system-wide break down of controls for months while putting through fraudulent transactions.