Thursday, July 29, 2021
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RBI to put multiple smaller transactions from a single account under scanner

RBIThe Reserve Bank of India is likely to make it mandatory for all the banks to report smaller transactions from a single account. This appears to be a fallout  of the alleged Rs. 6,000-crore foreign exchange scam in Bank of Baroda.

While foreign remittances were made from the bank’s Ashok Vihar branch in Delhi, these were not reported as they were lower than the threshold limit of $100,000.

The Central Vigilance Commission (CVC) has urged RBI to make it mandatory for banks to report cases involving multiple transactions within a span of a couple of days that take place from a single account, even if they are lower than the threshold limit.

The CVC has also advised the Indian Banks’ Association (IBA) and RBI that multiple transactions from a single account, even if they are relatively lower than $100,000 on the same day, must be brought to light and reported.

The RBI and CVC are looking to bring in a stringent “know-your-employee” norm. The CVC, which is also part of the multi-agency probe, is set to ask banks to put in place a proper “whistleblowing” guideline, especially in relation to secrecy and protection of the whistleblower.

The CVC has also asked banks to undertake a full scrutiny of their own systems, including know your customer norms as well as transaction patterns of their high-value account holders.

The state-owned banks have incurred a loss of over Rs. 11,000 crore in the previous financial year on account of frauds, as per RBI data. In 2013-14, about 2,500 cases of frauds were reported, resulting in a loss of Rs. 7,542 crore.

The Bank of Baroda too, in a statement, said the lender would undertake a comprehensive review and identify the deficiencies in the structure, processes and systems, with a view to prevent recurrence of such an incident.”

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