State-run National Bank for Agriculture and Rural Development (Nabard), in view of the present volume and magnitude of fraud cases and amounts outstanding, has asked regional rural banks (RRBs), state cooperative banks (SCBs) and district central cooperative banks (DCCBs) to urgently constitute a fraud risk group (FRG), consisting of senior officials. Of the total 97 RRBs, 376 DCCBs and 30 SCBs, very few banks have adopted modified guidelines issued by Nabard to prevent frauds.
Nabard sources told FE on Monday, ?The FRG would review pending fraud cases more critically and identify the loopholes and suggest measures for plugging them. The FRG would also identify the reasons contributing to pending fraud cases and suggest appropriate steps their early closure. All RRBs, SCBs and DCCBs have been asked to take suitable steps and instruct the staff involved in the tabulation of data to exercise greater care and caution while compiling and forwarding fraud-related returns.?
Sources said frauds are perpetrated by employees, customers, outsiders, strangers and employees, in collusion with customers/outsiders. ?Banks have to handle a huge rush of customers during the first week or the first 10 days in a month. With long queues and immense rush of work, there is a tendency to overlook certain procedural aspects and overall control systems get automatically relaxed. A common thread running through fraudulent transactions is forging of cheques, drafts, credit advice and instrument of funds transfer and in credit areas through fake security documents. Owing to a lack of proper governance, the financial system has been used as a conduit for unhealthy activities. Consequently, irregularities in securities and banking transactions affect both financial and moral values.?