Empty bank accounts in Vigilance Week expose gaps in banking oversight

Are IT-trained staff available when regular operators are on leave? Are daily-waged support workers restricted to non-sensitive areas? Banks need to address these questions

Farmer Vijendra Singh lost money kept with a bank. Singh told the media that his savings account at a branch of Punjab National Bank (PNB) in Greater Noida once held approximately ₹87–88 lakh, including compensation received from the authorities for land acquisition. When he checked, the balance had fallen to barely ₹1 lakh. 

He is one of many depositors whose money, they allege, had disappeared from savings accounts and fixed deposits without their authorisation. 

This happened in the last week of October when the banking industry was observing Vigilance Awareness Week. 

Since 2000, every year, during the week that includes the birth anniversary of Sardar Vallabhbhai Patel (October 31), a nationwide campaign has been organised by the Central Vigilance Commission (CVC) to promote integrity, transparency, and the fight against corruption in public governance. This year, it was observed from October 26 to November 1 on the theme ‘Probity for Prosperity’. 

Government departments, central public sector enterprises, public sector banks, and other participating organisations were directed to begin the observance with an integrity pledge. Workshops, outreach programmes, debates, quizzes, 

and other awareness activities were also encouraged. 

The vigilance-related activities are not confined to just one week. The CVC’s three-month preventive-vigilance campaign this year, running from August 17 to November 16, identifies five priorities: Disposal of pending complaints, disposal of pending cases, capacity building, digital initiatives, and transparency in contract management and awarding contracts to vendors. Work under these priority heads will continue till November 30. 

The initiative is great. But, beyond meetings and posters, awareness must reach branch counters. All banks must remain vigilant 24/7 through an ever-aware oversight machinery. Not pledges and activities — the real scorecard is the number of vulnerable pockets closed within the system. 

The Greater Noida allegations concern savings and fixed-deposit accounts, including those of farmers who had deposited land-compensation money. Customers say transactions occurred without their consent and allege that they received no SMS alerts.

The bank concerned, I understand, has assured all aggrieved depositors of refunds within a few days. Media reports also hint at unauthorised access to lockers and growing anxiety among NRI customers. I have not been able to independently corroborate such allegations. 

Scenes of distressed depositors waiting for explanations may evoke memories of troubled cooperative banks. But this bank is not insolvent, and only a tiny fraction of deposits is affected. Therefore, customers need not panic. 

However, the institution’s immediate task is twofold: Establish the facts and prevent uncertainty from becoming a second injury.

The bank’s preliminary inquiry identified approximately ₹ 10.24 crore in suspected unauthorised withdrawals, even as reconciliation continues to establish the full extent of the fraud. Earlier, customer allegations put the amount at nearly ₹ 35 crore, a figure that has not been officially confirmed. 

A November 1 media report noted that a first information report (FIR) filed with the police mentions transactions worth ₹12.12 crore, while a branch staff member speaking anonymously told a social media channel that approximately 35 account holders had approached the police, with alleged unauthorised transactions pegged at around ₹17 crore. 

These are overlapping investigative and complaint-based figures. By November 3, the Central Bureau of Investigation had reportedly arrested two individuals—a bank office assistant and an outsider—in connection with the alleged ₹ 10.24-crore fraud case. Arrest or suspension does not establish guilt, and the investigation into other possible accomplices and the movement of funds continues. 

PNB’s October 30 statement said it had settled three claims totalling ₹43 lakh and would honour all genuine and valid claims.

Going by the FIR, one woman depositor found three unfamiliar transactions dated September 16, 2026, when she updated her passbook. She had neither authorised nor consented to them. 

The subsequent inquiry reportedly found that credentials belonging to six bank officials had been used for unauthorised transactions. Whether those credentials were shared voluntarily or compromised remains part of the investigation. 

Other reported allegations include the manipulation of customer details and fixed-deposit records, premature closures, and diversion of funds through beneficiary accounts. The suspected activities had reportedly been going on for about three years.

Why did the institution need a customer’s complaint to identify a pattern that its own internal controls should have flagged? The investigation must establish whether system alerts were absent, inadequately designed, ignored, or improperly closed. It must also determine which officials had access to the relevant information and what action they took. 

National figures underline the gravity of the issue. The Reserve Bank of India’s (RBI’s) Annual Report for 2025–26 records 10,114 fraud cases involving ₹48,021 crore, compared with 23,722 cases involving ₹32,803 crore in the preceding year. The data covers frauds of ₹1 lakh and above, and cases reported in a given year may relate to events from earlier years. Also, the FY2025-26 figure includes ₹30,199 crore relating to 314 older cases reported afresh following a re-examination. Crucially, the amount involved in reported frauds does not necessarily represent the final loss. 

Reports of surprise inspections at PNB spoke of outsiders working inside banking areas, including cash counters and on branch computers. Initial reporting put the number of suspended branch heads at around 20. A recent media report revised the figure to around 50. Claims that suspensions may have reached nearly 100 remain unverified. 

The bank’s inspection at the branches involved found that individuals — including insurance-company personnel, recovery agents, and other helpers — were allegedly assisting with core banking work amid claims of staffing shortages.

Business correspondents, insurance representatives, and temporary workers may have legitimate, defined duties. But their presence does not justify access to another employee’s password, unrestricted customer information, or transaction-authorisation powers. Staffing shortages cannot be an excuse for password sharing, and management cannot treat staffing levels as unrelated to financial controls. 

Can a branch maintain a genuine dual-control separation between the person entering a transaction and the person approving it? Are sufficiently IT-trained staff available when the regular operator of a specific desk goes on leave? Are support workers hired on a daily-wage basis properly engaged, supervised, and strictly restricted to non-sensitive areas? What happens when a manager formally reports that safe working arrangements cannot be maintained? 

The reported reliance on informal helpers should prompt a serious re-examination of recruitment and deployment policies, including support-staff arrangements — rather than an assumption that daily-wage labour is an acceptable substitute for controlled system access. 

Management must also examine whether third-party sales targets and other performance pressures leave sufficient time for the daily verification of transactions, reconciliation of all non-customer accounts, and prompt complaint handling. 

Finally, auditors should examine repeated debits and credits, ledger reversals, connected beneficiaries, and changes to deposit instructions. They must scrutinise premature fixed deposit closures, changes to maturity-proceeds credit accounts, modifications to account operating details, registered mobile number alterations, disabled alert preferences, and unusual staff access patterns. 

Following the RBI’s Master Direction on Fraud Risk Management (issued on July 31, 2026), banks require board-approved arrangements covering prevention, detection, investigation, staff accountability, recovery, and reporting. A dedicated board committee carries the responsibility for reviewing frauds, root causes, and corrective measures. The directions also call for early warning mechanisms covering non-credit banking transactions, with monitoring designed to promptly identify unusual activity.

PNB’s experience with the 2018 Nirav Modi scandal makes the need for durable institutional learning particularly vital. Following that event, the RBI discontinued Letters of Undertaking (LoUs) for import trade credit. 

For a depositor awaiting access to savings, a mere institutional explanation is not a resolution. The bank should provide a dedicated claims officer, written acknowledgements, clear verification requirements, and regular progress updates. Restoration of funds must transparently cover applicable interest alongside the principal amount, without unjust charges.

For Singh and other complainants, the test is not whether employees raised their hands to take a pledge during Vigilance Awareness Week. It is whether the institution can explain what happened, restore legitimate claims, and demonstrate that the next depositor will not face the same ordeal. 

Sardar Vallabhbhai Patel’s standard for public service remains a fitting measure of that responsibility. In 1947, while addressing civil service probationers, Patel said: “No service worth the name can claim to exist if it does not have in view the achievement of the highest standard of integrity.”

---

Writes Banker’s Trust every Monday in Business Standard. Latest book Roller Coaster: An Affair with Banking  

Twitter: TamalBandyo

Website: https://bankerstrust.in