Advisory Board for Banking Frauds – Free PDF Download

RISE IN BANKING FRAUD

• Number of fraud cases reported in 2018-19 by banks increased by 15% compared to last year.
• But the amount involved in frauds has gone up by a whopping 73.8%.
• However, the RBI adds that the amounts and frauds are related to earlier years.
• Banks took an average of 22 months between the occurrence of the fraud and its detection.

 IN NEWS

• CVC has constituted Advisory Board for Banking Frauds (ABBF) headed by former Vigilance Commissioner TM Bhasin.
• The panel in its previous avatar was called the Advisory Board on Bank, Commercial and Financial Frauds.

 MALEGAM COMMITTEE

• The decision follows recommendation by an RBI-constituted expert committee on NPA and frauds headed by YH Malegam in 2018.

 ABOUT THE BOARD

• The ABBF has been formed in consultation with RBI.
• Besides the chairman, the Board consists of 3 other members.
• The tenure of the Chairman and members would be for a period of 2 years from 21st August, 2019.
• The RBI headquarter in New Delhi, will provide required secretarial services, logistic and analytical support along with the necessary funding to the board.

FUNCTIONS OF THE BOARD

• The board’s jurisdiction would be confined to those cases involving the level of officers of General Manager and above in the Public Sector Banks.
• The ABBF would function as the first level of examination of all large fraud cases before recommendations are made to the investigative agencies by the respective PSBs.
• Lenders would refer all large fraud cases above Rs 50 crore to the board.
• On receipt of its recommendation or advice, the bank concerned would take further action in such matter.
• The CBI may also refer any case or matter to the board where it has any issue or difficulty or in technical matters with the PSB concerned.
•  The board would also periodically carry out frauds analysis in the financial system and give inputs for policy formulation related to the fraud to the RBI.

GOVERNMENT ADVICE

• In a bid to check incidences of fraud, the government has issued the ‘framework for timely detection, reporting, and investigation relating to large-value bank frauds’ to PSBs.
• All accounts exceeding Rs 50 crore, if classified as an NPA, should be examined by banks from the angle of possible fraud.
• A report be placed before the bank’s Committee for Review of NPAs based on the findings of the investigation.
• Besides, the PSBs have been advised to obtain a certified copy of the passport of promoters/directors and other authorised signatories of companies taking loan facilities of more than Rs 50 crore.

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