RBI asks co-op banks to set up special committee to check large value frauds
Updated: Jan 08, 2015 02:10:40pm
Mumbai, Jan 8 (KNN) The Reserve Bank of India has asked all urban cooperative banks to constitute a special committee to monitor and follow up cases of fraud worth Rs one crore and above.
“It has, therefore, been decided that the Boards of banks should constitute a Special Committee for monitoring and following up cases of frauds involving amounts of Rs.1 crore and above exclusively, while ACB may continue to monitor all the cases of frauds in general,” RBI said in a notification on January-7.
Earlier banks were asked to constitute an apex level Audit Committee of Board (ACB) to oversee the internal inspection, statutory audit, inter branch / inter-bank accounts, balancing of books, major areas of house-keeping, etc. The Committee was also required to focus attention on preventive aspects as well as follow up action on frauds.
However, “as delay in various aspects of frauds like detection, reporting to regulatory and enforcement agencies and action against the perpetrators of the frauds has been causing concern, the need is felt for paying focused attention on monitoring of frauds at the highest level and suggested constituting a subcommittee of the Board which would be exclusively dedicated to the monitoring of fraud cases. There is also a need to assign a well-defined role to the Board of the banks in monitoring of fraud cases,” the apex bank said.
In addition to providing board guidelines regarding the constitution of the special committee of board, RBI has outlined the major functions of the Special Committee which would be to monitor and review all the frauds of Rs.1 crore and above; and identify system gaps and reasons for delay in detection.
The special committee would also monitor progress of CBI / Police Investigation, and recovery position and; ensure that staff accountability is examined at all levels in all the cases of frauds; review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of internal controls; and put in place other measures as may be considered relevant to strengthen preventive measures against frauds. (KNN/ES)
“It has, therefore, been decided that the Boards of banks should constitute a Special Committee for monitoring and following up cases of frauds involving amounts of Rs.1 crore and above exclusively, while ACB may continue to monitor all the cases of frauds in general,” RBI said in a notification on January-7.
Earlier banks were asked to constitute an apex level Audit Committee of Board (ACB) to oversee the internal inspection, statutory audit, inter branch / inter-bank accounts, balancing of books, major areas of house-keeping, etc. The Committee was also required to focus attention on preventive aspects as well as follow up action on frauds.
However, “as delay in various aspects of frauds like detection, reporting to regulatory and enforcement agencies and action against the perpetrators of the frauds has been causing concern, the need is felt for paying focused attention on monitoring of frauds at the highest level and suggested constituting a subcommittee of the Board which would be exclusively dedicated to the monitoring of fraud cases. There is also a need to assign a well-defined role to the Board of the banks in monitoring of fraud cases,” the apex bank said.
In addition to providing board guidelines regarding the constitution of the special committee of board, RBI has outlined the major functions of the Special Committee which would be to monitor and review all the frauds of Rs.1 crore and above; and identify system gaps and reasons for delay in detection.
The special committee would also monitor progress of CBI / Police Investigation, and recovery position and; ensure that staff accountability is examined at all levels in all the cases of frauds; review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of internal controls; and put in place other measures as may be considered relevant to strengthen preventive measures against frauds. (KNN/ES)
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