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CVC examining audit reports of PSBs, insurance companies to check fraud

A total of 8,802 frauds have been reported by scheduled commercial banks and public sector banks in 2017-18 as against 7,794 in 2016-17 and 7,482 in 2015-16

Press Trust of India  |  New Delhi 

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Probity watchdog (CVC) has started examining reports of and companies to check incidents of fraud and suggest corrective measures, officials said Wednesday.

The move assumes significance with reporting large scale fraud cases and the high number of or non-performing assets, they said.

Vigilance Commissioner T M Bhasin told the is getting a review done of central statutory reports, concurrent auditors' reports and other reports through chief vigilance officers of all and companies.

"The same (reports) are analysed in the Commission and a corrective action plan is advised for time-bound implementation," he said.

Chief vigilance officers act as a distant arm of the to check and other fraudulent activities in an organisation.

According to government data, various banks have reported an increase in cases of fraud during 2015-16 and 2017-18.

A total of 8,802 frauds have been reported by scheduled commercial banks and in 2017-18 as against 7,794 in 2016-17 and 7,482 in 2015-16, according to a written reply given by the Ministry in the Lok Sabha recently.

The (RBI) monitors frauds reported by banks.

For management of fraud risk and to direct the focus of banks to early detection of loan frauds, prompt reporting to and investigative agencies and timely initiation of staff accountability proceedings, has issued a framework for dealing with loan frauds and Red Flagged Accounts (RFA). Time lines have been given for action incumbent on banks in dealing with loan frauds of Rs 500 million and above, the ministry said.

The red flagging is done on an platform where all banks report large exposure to entities/individuals so other banks can be forewarned about fraud risk, it said.

In October, the completed a first-of-its-kind analysis of top 100 banking frauds, including those in the jewellery and aviation sectors, and shared its findings with the RBI, the (ED) and the (CBI) among others.

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The analysis focussed on the modus operandi, amount involved, type of lending (viz. consortium or individual), anomalies observed, loopholes that facilitated perpetration of the fraud concerned and the systemic improvements required to plug the gaps in the system and procedures.

The frauds were classified and analysed for 13 sectors -- gems and jewellery, and industry, agro, media, aviation, service and project, discounting of cheques, trading, information technology, export business, fixed deposits, demand loan and letter of comfort.

The modus operandi of these top 100 loans has been thoroughly analysed and various loopholes or lapses have been identified, Bhasin had said after releasing a report on the matter.

Based on the findings, various industry specific suggestions for systemic improvement have been given in the final report. The suggestions have also been sent to the Department of Financial Services and the in order to plug the loopholes observed by the Commission, he said.

First Published: Wed, December 26 2018. 13:30 IST