Page 30 - BANKING FINANCE APRIL 2017

ARTICLE

In order to have uniformity in reporting, frauds have been 2. Visit borrower's / guarantor's residence / property sites
classified by RBI, as under, based mainly on the provision of proposed to be purchased and their office / place of busi-
Indian Penal Code : ness to ascertain their genuineness.
1. Misappropriation and criminal breach of trust. 3. Discreet enquiries are to be made to ascertain their

2. Fraudulent encashment through forged instructions / credentials and antecedents, information about their
instruments, manipulation of books of accounts or loans, if any, availed by them from other Branches /
through fictitious accounts and conversion of property. Banks / Institutions etc. at the time of pre-sanction ef-
3. Unauthorized credit facilities extended for reward or forts.
for illegal gratification. 4. The bank branches should make an intelligent scrutiny
4. Negligence and cash shortages of the Advocate's Report and Valuation Report instead
of solely relying on them. Panel advocate should be
a) Cases of cash shortage more than Rs.10,000/-(in-
cluding at ATMs) and asked to obtain certified copy of Title Deed(s) from Sub
Registrar's Office for comparison with Original Title
b) Cases of cash shortage of more than Rs.5000.00 if
Deed(s) submitted by borrower / prospective borrower.
detected by management/ auditor/ inspecting of-
5. Before creating mortgage, branches should compare
ficer and not reported on the day of occurrence by
the certified copy of the title deed(s) obtained from the
the persons handling cash.
Sub-Registrar's office and ensure that the title deed(s)
5. Cheating and forgery.
submitted by the Mortgager tally with certified copy
6. Irregularities in foreign exchange transactions. obtained by Panel Advocate.
7. Any other type of fraud not coming under the specific 6. Alert reports generated by systems like Core Banking,
heads as above. other control reports and verification of vouchers are
to be reviewed on daily basis.
Prevention and Detection of Frauds - 7. Staff accounts should be monitored by Branch Heads
at regular intervals.
A look at some of the good practices adopted in the bank-
ing industry: 8. The capability level permitted to officials in the system
for conducting transactions should not exceed the pow-
Prevention of frauds:
ers delegated to them.
1. The bank branches should strictly follow KYC norms while
opening deposit as well as loan accounts. 9. The fraud prevention and other instructions issued / laid
down by respective Bank and RBI Guidelines should be
meticulously followed.
10. Caution list(s), Defaulter's List and CIBIL Report, CERSAI
Search should be referred regularly at the time of sanc-
tion of loans, etc
11. Whistle Blower Concept / Alertness Award Scheme
framed by Banks has to be effectively circulated
amongst the staff to encourage the culture of zero tol-
erance to fraud.

Detection of frauds:
Systems and Procedures prescribed by the Banks adequately
facilitate timely detection of frauds. Some of the sources
unearthing the fraud could be:
1. Complaints from customers / alerts from investigating
agencies

30 | 2017 | APRIL | BANKING FINANCE

Insurance Training Centre © Call 09883398055 / 09883380339