Talking Point: ‘Banks to report frauds of Rs 1 crore and above to CVC’

Based on the reports, the anti-corruption watchdog, which has hired four General Manager-ranked officers from bank as advisors, will recommend whether CBI probe can be ordered. CBI data, in 2015, shows the agency had probed 171 cases of bank frauds involving funds of Rs 20,646 crore. In addition, CBI is also investigating the Ponzi schemes involving funds of over Rs 1.20 lakh crore. 

The Commission will also call regular monthly meetings of senior officials of Reserve Bank of India (RBI), CBI and banks to monitor probe in suspected bank frauds of Rs 50 crore and above. The banks have been asked to share their reports of Fraud Monitoring and Reporting (FMR) mechanism with the CVC in the suspected fraud cases of Rs 1 crore and above. Till now this report was shared with the RBI only, Vigilance Commissioner TM Bhasin said. 

“For this purpose, we will convene regular meetings where the officials concerned of the CBI, RBI and the banks in question will be called,” Bhasin said. The move comes following the difference in the definition of “fraud” in the banks and investigating agencies. CBI had complained that banks were not forthcoming with the reporting of frauds to it. “In the case of banks, there is some misunderstanding in what constitutes fraud. Fraud as understood in the banking sector is different from the fraud as understood by investigating agencies under IPC and CrPC. Banks do report NPAs and frauds to Reserve Bank as per their guidelines,” Central Vigilance Commissioner KV Chowdary said, noting that after consultation with RBI, changes had been made. 

A special chapter has been added in the Vigilance Manual for Banking system with updated one to be unveiled by Prime Minister Narendra Modi at a function of CVC on November 7. The CVC has defined malafide and bonafide actions which caused misunderstanding between banks and investigating agencies.