New Delhi: Banks have drawn up a long list of around 3,000 entities involved in fraud that they will share and update on a real-time basis amid a spike in banking frauds, people familiar with the developments said. The list includes lawyers, builders, and gold loan appraisers among others colluding to secure loans through fraudulent means, they said.
“The issue was discussed at a meeting (last month) with the Advisory Board for Banking and Financial Frauds (ABBFF), and it was decided that it will be made mandatory for the lenders to check this list before dealing with such entities and further update it on a real-time basis,” a senior bank executive told ET.
He said the list is likely to be expanded as banks comply with the latest guidelines on fraud classification issued by the Reserve Bank of India (RBI) on July 15.
Another bank executive said it was pointed out during the meeting with ABBFF that the operational staff is not accessing the ‘caution list’ mandatorily, which can lead to fraudulent entities finding a way back into the financial system. “All banks will be sending internal directives to ensure full compliance,” he added.
Banks individually take action against entities involved in fraud, but it was observed that many times such entities were engaged by other regulated entities (REs).
The consolidated list allows all lenders to run a check and ensure they do not engage with entities facing action for banking fraud.
The Central Vigilance Commission (CVC) has directed that all PSBs, public sector insurance companies, and public sector financial institutions should refer all matters of fraud involving ₹3 crore and above to ABBFF for advice.
Additionally, the board has been empowered to periodically carry out fraud analysis in the financial system and give inputs, if any, for policy formulation to RBI and CVC.
“The list may be updated as banks would be completing their internal exercise soon,” said one of the bank executives quoted above. The new list may have more entities like business correspondents, chartered accountants, and valuers, he added.
