To curb frauds, banks plan more checks on e-transfer of funds

Electronic fund transfer from one account to another and opening of current accounts may soon become a little more difficult.

Taking a cue from the recent frauds in West Bengal, bankers are set to introduce a new set of security measures on current account operation. Savings bank accountholders may also face the heat as banks are planning to add a few more security checks on the electronic fund transfer or RTGS (real time gross settlement) channel.

In the second week of March this year, West Bengal Infrastructure Development Finance Corporation (WBIDFC) and West Bengal State Cooperative Bank were defrauded of Rs 120 crore and Rs 40 crore, respectively, through forgery of term-deposit receipts involving several public and private sector banks.

According to a senior official of Allahabad Bank, an informal working group comprising bankers and Kolkata police has been set up to suggest corrective measures.

“Based on our initial observations, we have realised that most of these frauds are being perpetrated using current accounts,” the official told Business Line.

Case Study

The working group is in the process of preparing a case study on the modus operandi of such frauds. The report is likely to be ready by June-end.

Meanwhile, the police have arrested Indrajit Chatterjee, the alleged mastermind of the Rs 120-crore WBIDFC fraud.

“We plan to approach the Reserve Bank of India with our suggestions to make the process of opening of current accounts more stringent,” the official said.

UCO Bank, on its part, has tightened the norms for fund transfer using RTGS mode.

“Earlier fund transfer could be done by tallying the account and IFSC number.

“Now we are also asking for the name of beneficiary,” a senior official of the bank said.

The bank has also put restrictions on the amount that can be transferred through RTGS from branches other than the base branch (where customer actually holds the account).

WBIDFC had transferred Rs 59 crore in August 2012 and Rs 61 crore in January 2013 through RTGS to a current account at UCO Bank’s Circus Avenue branch in Kolkata to start term deposits.

The account, however, belonged to one SA Enterprises. Though the term deposits were never started, WBIDFC was handed over two term deposit certificates.

From SA Enterprises’s account in UCO Bank, money was remitted through RTGS to accounts in Bank of India, Allahabad Bank, IndusInd Bank Ltd, ICICI Bank Ltd, Development Credit Bank Ltd, HDFC Bank Ltd and Punjab National Bank.

In another such instance, fixed-deposit receipts issued to West Bengal State Co-operative Bank, which had deposited Rs 20 crore each in UCO Bank and Indian Overseas Bank, were also found to be “fake”.

shobha.roy@thehindu.co.in

Source: thehindubusinessline