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IBA Proposes Regular CBI Training for Bankers to Combat Rising Fraud Cases


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The Indian Banking Association (IBA) has proposed to the finance ministry that public sector banks (PSBs) should regularly organize training sessions with the Central Bureau of Investigation (CBI) to improve vigilance and reduce the risk of fraud.

A senior IBA official explained that there has been a noticeable rise in frauds in recent times. To address this, the IBA has recommended that PSBs arrange capacity-building sessions with CBI officials to enhance coordination and provide bankers with the knowledge needed to handle fraud-related issues. The official further suggested that banks should invite CBI officers individually for such sessions.

The IBA also emphasized the importance of establishing a strong mechanism for selecting and removing third-party agencies, particularly rating agencies, to ensure transparency, accountability, and reliability. The process should be based on clear criteria such as the agency’s track record, methodology, regulatory compliance, and past performance.

Frauds in the banking sector have increased dramatically over the past five years, with the number of cases rising to 36,075. However, the total value of these frauds has decreased significantly, falling to around Rs 14,000 crore (Rs 140 billion) in FY24, down from over Rs 1.85 trillion in FY20.

The Reserve Bank of India (RBI), in its latest annual report, highlighted that while private banks reported the highest number of frauds, PSBs accounted for the majority of the fraud amount. Most of the frauds have occurred through digital payments, such as card and online transactions, which grew from 2,677 cases in FY20 to 29,082 in FY24.

Frauds in the loan portfolio have also been a major concern, although their value has decreased from Rs 1.81 trillion in FY20 to Rs 11,772 crore (Rs 117.72 billion) in FY24. Around 89% of the frauds reported in FY24 by value occurred in previous financial years.

An official document reviewed by Business Standard revealed that 1,078 cases of fraud registered by the CBI are still pending. Furthermore, 868 complaints have been pending for over two years for FIR registration.

Earlier this month, the finance ministry convened a meeting with PSB officials, other ministries, and investigative agencies, including the CBI, to discuss measures to speed up investigations into bank frauds. The ministry stressed the need for better cooperation between departments and agencies, which is expected to help resolve stressed banking assets more effectively.

The finance ministry also noted an increase in frauds committed by PSB staff in recent months. Between April 2020 and September 2024, there were 1,810 such incidents, involving Rs 1,820.74 crore (Rs 18.2074 billion). According to the RBI’s Master Direction on Fraud Classification and Reporting, banks are required to report cases involving their own employees to the CBI or local police if fraud is suspected.

The finance ministry’s statement also mentioned that the meeting covered operational issues related to filing complaints with the CBI in bank fraud cases, the regular review of investigations, and the support needed by the CBI during these investigations. It was concluded that regular discussions between bankers and the CBI could improve the efficiency of fraud investigations.

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