*Banks working with CEIB on data sharing to curb frauds – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/banking/finance/banking/banks-working-with-ceib-on-data-sharing-to-curb-frauds/articleshow/92733262.cms

Synopsis

“We will have a uniform format for obtention of information and further aim towards digitisation of the whole information network, so that banks have real-time information,” he said, adding that earlier this year the Reserve Bank had also given its nod on the Standard Operating Procedure (SOP) that the banks had proposed for submission of information or documents with the CEIB.

Lenders are working with the Central Economic Intelligence Bureau (CEIB) and other law enforcement agencies to set up a more robust intelligence-sharing framework, a move seen helping reduce frauds in the banking sector.

A senior bank executive said this will ensure that lenders have real-time information on borrowers with regard to any economic offence and can take informed decisions.

“We will have a uniform format for obtention of information and further aim towards digitisation of the whole information network, so that banks have real-time information,” he said, adding that earlier this year the Reserve Bank had also given its nod on the Standard Operating Procedure (SOP) that the banks had proposed for submission of information or documents with the CEIB.

CEIB will further closely work with all investigating agencies to ensure that red flagging of such entities is done to lenders in case they detect any irregularities of significance,” he said.

psb

Under the existing framework in relation to large-value frauds, the finance ministry has asked state-run lenders to seek a report from the CEIB on any prospective borrower at the pre-sanction stage, renewal of existing loan, and on non-performing asset (NPA) account for an amount of ₹50 crore and above.

"This report entails economic offence details (on) bad loans with other banks and financial institutions, and if the borrowers have additional exposure to the banking system through any connected firms," a senior bank executive said, adding that real-time information will help make lenders take timely action to identify fraud and initiate recovery of siphoned off funds.

An industry executive said that frauds and the corresponding amount involved should be analysed from the banking approach of the respective banks. “It looks that not all banks report frauds and amount involved on the same parameters,” he said.

In 2021-22, according to RBI data, in frauds across all categories, while

Kotak Mahindra Bank

NSE 0.36 % reported 34,511 cases worth ₹212 crore, the country’s largest bank,

SBI

NSE 0.37 %, reported 4,192 cases worth ₹6,932 crore.

According to an RBI report, the number of frauds reported by private sector banks were mainly on account of small value card/internet frauds, and the fraud amount reported by public sector banks was mainly in the loan portfolio.

The fraud amount for PSBs almost halved in 2021-22 to Rs 40,282 crore, as against Rs 81,901 crore a year ago, the RBI in its report said, adding that private-sector banks reported the maximum number of frauds, and PSBs contributed maximum to the fraud amount.

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