Report fraud cases of Rs 1 cr and above to CBI: RBI to banks

In order to check banking frauds, the Reserve Bank of India (RBI) today asked public sector lenders to promptly report cases of cheating involving Rs 1 crore and above to the CBI, and of the lesser amount to the police.

"Incidence of frauds, dacoities, robberies, etc, in banks is a matter of concern," the RBI said, issuing guidelines for reporting frauds.

Private and foreign banks have been asked to report cases of fraud involving an amount of Rs 1 lakh and above to the police. Fraud by employees exceeding Rs 10,000 should also be reported to the police so that the guilty persons do not go unpunished, the RBI said.

Besides, it added that cases involving more than Rs 7.5 crore should be reported to Banking Security and Fraud Cell of the respective centres, which is specialised cell of the Economic Offences Wing of the CBI.

The central bank said that it had been observed that frauds are, at times, detected in banks long after their perpetration.

It also pointed out, "On some occasions, RBI comes to know about frauds involving large amounts only through press reports."

Banks should, therefore, ensure that the reporting system is suitably streamlined so that frauds are reported without any delay, RBI said, adding that they must fix staff accountability in respect of delays in reporting fraud cases to the central bank.

As per the guidelines, fraud cases involving amounts of Rs 1 crore and above should also be reported to Serious Fraud Investigation Office (SFIO) in Ministry of Company Affairs, besides CBI.

The guidelines also said the banks should ensure that all frauds of Rs 1 lakh and above are reported to their boards promptly.

The RBI has been advising banks from time to time about the major fraud-prone areas and the safeguards necessary for prevention of frauds.

Misappropriation and criminal breach of trust, fraudulent encashment through forged instruments, negligence and cash shortages, are some of the common frauds observed in the banking industry.