Lauding RBI’s fraud detection framework, bankers on Friday said it would lead to better information sharing among consortium members and faster resolution through joint lender forums (JLFs).
IDBI Bank executive director RK Bansal said that though banks have fraud detection systems in place, there is no sharing of information among banks. At present, banks can call a borrower wilful defaulter if it detects siphoning of funds. However, every bank in the consortium has to individually declare a company wilful defaulter as there is no platform to share it with others.
“Integrating fraud detection with the central repository of information on large credits (CRILC) repository and JLFs will hasten the process. JLFs – which were earlier used in accounts that have repayment overdue of more than 60 days – can now be used to report fraud and commence a forensic audit,” said Bansal.
Lenders said they have been aggressive in reporting frauds to the Institute of Chartered Accountant of India (ICAI).
“While we report cases to the CBI, we have also started informing ICAI as, in many cases, we have found how chartered accountants have fudged company balance sheets,” said State Bank of Mysore MD Sharad Sharma. Sharma said the bank has recently classified two accounts from oil processing and leasing sectors as wilful defaulters.
In its notification, RBI said a bank can label an account a red-flagged account (RFA) if it is under suspicion of fraudulent activity and such a suspicion is thrown up by an early warning signal (EWS). “Banks must use such triggers to launch a detailed investigation,” said RBI.
Federal Bank MD& CEO Shyam Srinivasan, too, said that banks have early warning signals at various stages of an account. With the detailed guidelines, Srinivasan said, RBI has made it easier for banks to share information and report fraud to other lenders of the consortium within 30 days of the detection.
“Account-specific monitoring and sharing information on CRILC will lead to faster resolution through JLFs,” he added.
Under this framework, banks will now have to access and process data from registrar of companies, monitor stock movements, legal disputes and track record of the borrower before sanctioning a loan.
K V Karthik, senior director, Deloitte India said, “The longer it takes for you to detect a fraud, the recovery becomes difficult.”