Ten Things You Won't Miss Out If You Attend CVC Starts Examining PSBs\', Insurance Cos\' Audit Reports.

Ten Things You Will not Miss Out If You Attend CVC Starts Examining PSBs, 'Insurance Cos'' Audit Reports
Ten Things You Will not Miss Out If You Attend CVC Starts Examining PSBs, 'Insurance Cos'' Audit Reports
New Delhi: The probity watchdog Central Vigilance Commission (CVC) has started examining audit reports of state-run banks and insurance companies to check incidents of fraud and suggest

corrective measures, officials said Wednesday The move assumes significance with banks reporting large scale fraud cases and the high number of bad loans or non-performing assets, they said.

Vigilance Commissioner T M Bhasin said that the Central Vigilance Commission is getting a review done of central statutory reports, concurrent auditors' reports and other auditor reports through all public sector banks and insurance companies of the Chief Vigilance Officers.

"The same (audit reports) are analyzed in the Commission and a corrective action plan is advised for time-bound implementation," he said.

Chief vigilance officers act as a distant arm of the Central Vigilance Commission to check corruption and other fraudulent activities in an organization. According to government data, various banks have reported an increase in cases of fraud during 2015-16 and 2017-18.

A total of 8,802 frauds have been reported by scheduled commercial banks and public sector banks in 2017-18 as against 7,794 in 2016-17 and 7,482 in 2015-16, according to a written reply by the Finance Ministry in Lok Sabha recently. The Reserve Bank of India (RBI) monitors frauds reported by banks.

For management of fraud risk and to direct the focus of banks for early detection of loan frauds, prompt reporting to RBI and investigative agencies and timely initiation of staff accountability proceedings, RBI has issued a framework for dealing fraud and red flagged accounts (RFA ).

Time lines have been given for action on banks in dealing with loan frauds of Rs 50 crore and above, the ministry said.

The red flagging is an information technology platform where all banks report large exposure to entities / individuals so other banks can be forewarned about fraud risk, it said.

In October, the Central Vigilance Commission completed a first-of-its-kind analysis of top 100 banking frauds, including those in the jewelery and aviation sectors, and shared its findings with the RBI, the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) among others

The analysis focussed on the modus operandi, type of loaning (eg consortium or individual), anomalies observed, that the facilitated perpetration of the fraud and the systemic improvements required the gaps in the system and procedures.

The frauds were classified and analyzed for 13 sectors - gems and jewelery, manufacturing and industry, agro, media, aviation, service and project, checks discounting, trading, information technology, export business, fixed deposits, demand loan and letter comfort


The modus operandi of these top 100 loans has been thoroughly analyzed and various loopholes or lapses were identified, Bhasin said the matter on a report released after.

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