Reserve Bank seeks concerted action to check bank frauds

In an effort to prevent fraud in cases involving multiple banking arrangements, the Reserve Bank of India (RBI) has asked that the details of such frauds should immediately be shared by the detector bank with consortium banks for joint action.

RBI in a communication to bank chiefs said a number of cases have come to light where a customer, after defrauding one of the financing banks, continued to deal with other banks and, in some instances, availed even higher limits at those banks.

In a multiple banking arrangement, a customer enters into a relationship with a consortium of banks to get credit.

 

Banks should take a consolidated view of frauds committed by a borrower on different banks to ascertain the quantum of frauds, losses caused by such frauds as well as perceived ramifications.

In certain cases, borrowers had used accounts maintained at other banks to siphon off funds fraudulently diverted from the bank on which the fraud was perpetrated, it said.

While the defrauded bank was engaged in recovery action, the borrowers continued to perpetrate fraud with other financing banks.