The Reserve Bank of India (RBI) has directed primary urban co-operative banks (UCBs) to ensure that their concurrent auditors certify that all investments held by them as on the last reporting Friday of each quarter and as reported to it are actually owned and held by them.
By putting the onus of certification on these banks the central bank is seeking to ensure that they go strictly by the rule book on investments and also stem fraudulent transactions.
The central bank has taken such a step as nearly half-a-dozen co-operative banks in Maharashtra and Gujarat were duped by the now defunct broking firm Home Trade. Though the banks parted with funds for purchase of government securities they were left holding dud contract notes.
The concurrent auditors now have the additional responsibility of verifying and then certifying the holding of government securities by these co-operative banks as evidenced by the custodians
