RBI to keep away from fraud tackling moves of banks
By Vaibhav Aggarwal
Jan 21, 2011
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Banking and monetary regulator, Reserve Bank of India has informed banks that it does not want to involve itself in the fraud monitoring mechanisms adopted by them. The apex bank has the view that all banks should have their individual mechanisms of fraud detection rather than a centralized one.

"Recently, a review of the fraud detection methods of banks was undertaken by the RBI after the Citibank issue came to light. We decided that fraud detection and management is an internal problem that banks have to tackle and that the central bank will not interfere in it," said an official.

However, inspite of its non involvement, banks are required to report any kind of fraud case to the fraud monitoring cell of RBI within two days.

All treasury departments of public sector banks practice the process of vigilance leave. During the vigilance week tenor, employees are not permitted to even log in to the operating systems or give any kind of official instructions.

"Small frauds are detected, but the amount is too less to create any systemic disturbance with one or two officers being involved. Even the accounts of officers in at all branches are closely monitored for any high value transactions other than the salary credits," a senior SBI official said.

"Even in foreign banks, at the branch-level mandatory leaves are a must. It has to be practiced without fail by all concerned," said a banker in a foreign bank.

KR Kamath, chairman and managing director of Punjab National Bank (PNB), said, "We practice vigilance leave for all our officers, but all leaves may not be taken at one go and we also have job rotation and transfers for employees. The chairman also goes on leave, but obviously he cannot be away for too long. All these practices are part of every public sector bank. We also have a fidelity insurance, but the amount is too little for any bank to be covered enough for a fraud."

"In SBI, vigilance leave is taken without fail especially by officers in sensitive operations like treasury and forex department," a senior SBI official said.


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