Page 53 - Banking Finance January 2025

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IBA suggests FinMin for training sessions

of bankers to handle fraud

T he Indian Banking Association (IBA) has suggested In terms of value, frauds have been reported primarily in

the loan portfolio, which has witnessed a gradual decline to
to the finance ministry to direct public sector
banks (PSBs) to organise regular training sessions
Rs 11,772 crore in FY24 from Rs 1.81 trillion in FY20. About
by the Central Bureau of Investigation (CBI) for
occurred in previous financial years.
bankers to enhance vigilance and prevent fraud. 89 per cent of the frauds reported in 2023-24 by value

"We have seen a surge in frauds in recent times. For better An official document, reviewed by Business Standard,
coordination and to give more knowledge to the bankers to showed that 1,078 cases of registration of FIR by CBI are
handle fraud-related situations, IBA has suggested to the pending. It further added that 868 complaints are pending
finance ministry that PSBs may hold capacity-building from more than 24 months for FIR registration.
sessions with CBI officials. Banks, on an individual basis,
should invite CBI officials for some sessions," a senior IBA Earlier this month, the finance ministry held a meeting with
official said. PSB officials, other ministries, and investigative agencies,
including the CBI, to discuss measures for expediting
The official also added that banks should establish a robust investigations into bank frauds. The ministry emphasised the
mechanism for the empanelment and de-empanelment of need for enhanced cooperation between departments and
third-party agencies, particularly rating agencies, to ensure agencies, which is expected to help resolve stressed banking
transparency, accountability, and reliability. assets more effectively.

"This process should include clear criteria such as the The finance ministry further highlighted that frauds
agency's track record, methodology, regulatory compliance, perpetrated by PSB staff have increased in recent months.
and performance history," the official added. From April, 2020, to September, 2024, there were 1,810
such incidents, involving Rs 1,820.74 crore. Under the
The number of frauds in the banking sector increased over RBI's Master Direction on Fraud Classification and
four times in the past five years to 36,075. However, the Reporting, banks are required to report cases involving their
amount involved came down significantly to about Rs 14,000 own employees to the CBI or local police if fraud is
crore in FY24 from over Rs 1.85 trillion in FY20. suspected.

The Reserve Bank of India (RBI), in its latest annual report, "Other operational issues related to filing of complaints with
said over the last three years, while private banks reported CBI in bank fraud cases, regular review of investigation and
maximum number of frauds, PSBs continued to contribute support required by CBI during investigation was also
most to the fraud amount. The number of frauds have discussed. It was observed that regular discussion between
predominantly been witnessed through digital payments bankers and CBI will bring in operational efficiencies in the
(card or internet), rising from 2,677 in FY20 to 29,082 in investigation of bank fraud cases," said the finance ministry
FY24. statement. (Source: Business Standard)

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