Bank frauds rise in India

Monday,01 February 2010, 06:27 hrs

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Email New Delhi: The Reserve Bank of India has announced that bank frauds are o
n the rise. Moreover, it is the public sector banks, considered to be safer than
private banks, that beat the latter in the swindling game, reports Economic Tim
es.
Crores of rupees have been disappearing from bank accounts or are being used dec
eitfully everyday. According to Economic Times, recently, a bank branch manager
recklessly sanctioned housing loans for the purpose of flats. On the behest of t
he bank's chief vigilance officer, an on spot verification by the Central Bureau
of Investigation (CBI) was conducted, during which it transpired that the three
storeyed building was constructed as a hotel.

On further probing it was found that the branch manager had sanctioned many othe
r housing loans against fabricated agreements of sale in fictitious names. By th
e time, the investigation was completed the bank had been duped of Rs. 25 crore.
"This is an alarming scenario. After all, it is people's hard earned money. Glob
ally, banks keep a tight vigil as any slip can bring them down and even impact t
he economy," says Mayur Joshi, Chairman of Indiaforensic Research Foundation, a
Pune-based consultancy which conducts fraud examination and forensic accounting
in India.
Information collated by the CBI has shown that, the central investigation body t
racks frauds valuing only a crore or above - amount doubled in 2008-09 from Rs.
659 crore in 2007-08 to Rs. 1,404 crore.
"The focus is on expeditious completion of investigation, close follow up of und
er-trial casess to conclude them without delay," says a CBI spokesperson. The ri
sing number of frauds has also got the central bank concerned. "It's high time b
anks strengthen their fraud management practices. In their bid to quickly expand
and grow, they are losing focus on risk control," said a senior official of the
bank, who did not want to be named.

why is it that when my life is so perfect, someone or something comes in to dest

roy it, and everything is gone

the financial express

VRising frauds expose banks to greater operational threats
fe Bureaus
Posted: Friday, Aug 28, 2009 at 2244 hrs IST
Updated: Friday, Aug 28, 2009 at 2244 hrs IST

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rfumeMumbai: In 2008-09, there were 212 banking frauds that amount to Rs 1,404 c
rore, while in total there were 23,914 fraud cases involving Rs 1,883 crore.
However, the figures were less in 2007-08, as there were 177 cases of banking fr
aud totalling a Rs 659 crore, while on a whole there were 21,247 instances of fr
auds involving a Rs 1,883 crore.
During the year 2008-09, 102 caution advices were issued to banks by the Reserve
Bank of India(RBI) through secured e-mail in respect of unscrupulous borrowers
who perpetrated frauds of amounts exceeding Rs 25 lakh. The banks could, in turn
, exercise due care while considering sanction of credit facilities to them, sai
d the RBI s report released on Thursday.
With a view to putting in place some deterrent action against entities such as b
uilders, warehouse owners, chartered accountants, lawyers and valuers of propert
ies, who do not have any contractual relationship with banks, it was decided tha
t banks could inform the Indian Banks Association (IBA) about the names of such e
ntities so that the IBA could prepare a caution list for circulation amongst ban
ks. A circular was issued to banks in March 2009 in this regard, said the report
.
The fraud monitoring function of the RBI has assumed greater significance in rec
ent years as there has been an increase in the number of frauds involving larger
amounts. Frauds have been noticed in traditional as also in new areas, such as
housing loans, credit cards, internet banking and outsourcing businesses.
The complexity of cases is increasingly exposing banks to greater operational ri
sk. The RBI, as part of its supervisory process, has been intimating banks from
time to time about common fraud-prone areas, modus operandi of frauds and the me
asures to be taken to prevent/ reduce the incidence of frauds.
During the economic slowdown in 2008-09, the need for proactive credit expansion
for stimulating the economy, especially in certain specified segments, such as
housing and infrastructure, was recognised. There is, however, a potential scope
for internal controls getting relaxed due to the exigency of credit expansion.
Weaker standards of control and risk management tend to facilitate frauds, espec
ially when rapid credit expansion has to be achieved in a slowing economy.
Therefore, appropriate precaution needs to be integrated into banks oversight str
ucture. In this context, the RBI proposes to evolve a prudential approach to fra
ud oversight as against the existing legal approach. The approach would seek to
align the supervisory oversight...

Rs 25-crore bank draft fraud: Cops arrest trustee of education body

Posted: Wednesday, Mar 10, 2010 at 0304 hrs
Two months after a complaint was lodged against former Union Industry Minister V
allabh Kathiriya s brother, Chhagan, and three others for trying to deposit a fake
 draft of Rs 25 crore, the police today arrested Joseph Rozario, trustee of Rajk
ot-based Rozario Educational and Charitable Trust.

Preliminary interrogation has revealed that Kathiriya was to get Rs 1.5 crore as
commission as per government rule on donations, if the draft was cleared. The c
omplaint was filed by ICICI Bank manager Nirav Shah against Chhagan, Rozario, Sa
njay Mondka and Himanshu Pandya for trying to encash Rs 25 crore in the Rozario
Trust through a bogus draft.

The police said Mondka and Pandya, who are from Surat and Vadodara respectively,
promised Chhagan, who runs an AIDS control NGO called Life Line Health Organisa
tion, to secure a huge donation. For the same purpose, Chhagan needed an account
exempted from income tax, which was provided by Rozario. The police are probing
the role of the accused.