RBI to step up vigilance on banking sector to prevent frauds

Tags: News
Reserve Bank of India (RBI) Deputy Governor R Gandhi today said "continuous vigilance and intelligence gathering" would be the central bank's key focus areas to prevent recurrence of frauds.

"Continuous vigilance and intelligence gathering are two items on which we are concentrating," Gandhi said on the sidelines of an industry event here.

Gandhi emphasised the need to go "deeper" and hence, the central bank may also do forensic audits of banks.

"One has to go behind the fraud and their modus operandi to find out what are the loopholes...Which need to be corrected. For that, forensic audits may be done," he said.

He said the RBI has already instructed lenders, stressing the importance of information sharing, especially in face of rising bad assets, which touched a high of 4.1 per cent in March 2014, rising from 3.7 per cent during the previous 12-month period.

"The database of reporting mechanism is already in place on high loan items. They also have to report stressed assets to this database. That is the first step to increase information flow for all the lenders," he said.

In the recent past, officials of three public sector banks, including Syndicate Bank's chairman and managing director S K Jain and three corporate leaders were arrested in an alleged cash-for-loan scam. Besides, few senior officials of Dena Bank and Oriental Bank of Commerce (OBC) were accused of defrauding Rs 436 crore of their customers fixed deposits through fraudulent means.

The RBI has ordered forensic audits of both the banks.

Asked if such incidents and the caution exercised by bankers due to these would slow down credit growth, Gandhi replied in the negative saying that economic growth has a bearing on the credit pick-up.

EDITORIAL OF THE DAY

  • J Jayalalithaa’s death invites questions on the future course of Tamil Nadu politics

    The death of Tamil Nadu chief minister J Jayalalilthaa, an all-powerful regional leader who has left behind no successor who can even remotely match h

FC NEWSLETTER

Stay informed on our latest news!

TODAY'S COLUMNS

Sandeep Bamzai

<b>Cut & Thrust:</b> At the cost of human life

Can we put a cost to human life? The incident ...

Urs Schoettli

japan’s trump card

Like most, the Japanese, too, were surprised by the election ...

Rajgopal Nidamboor

Soul consciousness and reason

The soul, in the philosophical writings of ancient Greece, has ...