Tarapore To Head Bank Frauds Advisory Board

The Reserve Bank of India (RBI) has appointed its former deputy governor, S S Tarapore, as the first full-time chairman of the advisory board on bank frauds.

The move follows the finance ministrys decision in December last year to set up a central board for bank frauds as an institutional mechanism to deal with requests from investigating agencies for permission to investigate cases against bank officials on reports of malfeasance in transactions.

The decision followed a hue and cry over investigations launched by the Central Bureau of Investigations (CBI) and the Enforcement Directorate into bank frauds which adversely affected credit offtake as managers were afraid of sanctioning credit.

 

The other members on the board are Justice B V Chavan; a retired judge of the Mumbai High Court and a member of the RBI Services Board, B N Bhagwat, retired secretary, government of India; Satish Sawhney, retired director-general of police, Maharashtra; and Y H Malegam, chartered accountant and senior partner in S S Billimoria & Co.

In a telephonic interview with Business Standard, Tarapore said: I am sure that the decision to set up a board will facilitate more transparency. However, he added that the boards first meeting would be held only after all the modalities were put in place.

According to a press release issued by the central bank yesterday, the advisory board has been set up to advise the RBI on cases referred by the CBI either directly or through the ministry of finance for investigation or registration of cases against bank officers of the rank of general manager and above.

The boards purview will be restricted to public sector banks and the State Bank of India and will not cover financial institutions like the Industrial Development Bank of India, the Industrial Credit and Investment Corporation of India, the Industrial Finance Corporation of India, and insurance companies like the General Insurance Corp oration and the Life Insurance Corporation.

According to the brief given by the finance ministry, the board will scrutinise questionable banking transactions, consult the RBI if necessary and then make its recommendations on whether there is sufficient basis for proceeding with criminal investigation.

The new system will not apply to cases in which the bank management refers cases to the CBI through the internal vigilance machinery of the bank, or cases in which the finance minister makes a reference.