Rise in frauds as improper training in credit monitoring exposes banks to risks

Source : INDIA TODAY NEWS

The Central Vigilance Commission (CVC) has said the lack of proper training in credit appraisal and its monitoring is one of the main reasons for the occurrence of frauds. The commission has advised banks and financial institutions to conduct dedicated training programmes to prevent rampant frauds for large project appraisals.

The assertion came as part of a circular issued on the observance of the ‘Vigilance Awareness Week’ from October 26 on the theme of ‘Probity for Prosperity’. As per the information, it has directed the concerned bodies to spread awareness and promote integrity in public administration through preventive vigilance initiatives.

In this regard, the commission has advised all organisations to undertake a three-month preventive vigilance campaign from August 17 to November 16. It comes with a focus on the “disposal of pending complaints”, “disposal of pending cases”, “capacity building programs”, “digital initiatives” and “contract management”, said the commission.

Providing details on the capacity building programme initiative, the commission said that the Advisory Board for Banking and Financial Frauds (ABBFF) has prepared a report “Modus Operandi and Root Cause Analysis of Frauds.” The report is said to have 20 case studies to analyse the ranging mechanisms of frauds.

“ABBFF has observed that lack of proper training in credit appraisal and credit monitoring is one of the reasons for the occurrence of frauds. Public sector banks and financial institutions may hold training programmes for emphasising these aspects through these case studies,” it said.

In the report, all concerned ministries, departments and organisations have been suggested to ensure active participation in the campaign.

The Action Taken Report (ATR) in respect of the aforesaid five preventive vigilance initiatives to be taken during this campaign period should be sent by all Chief Vigilance Officers to the CVC by November 30, it added. This is important as it ensures executive accountability by the officials.

As a result, the campaign is set to push institutions to clean up administrative backlogs, build technical capacity, and reform vulnerable operational systems wherever necessary.

– Ends

SOURCE :- TIMES OF INDIA