CVC examines audit reports of state-run banks, insurance companies to check fraud

New Delhi, Dec 27: 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.

According to officials, the move assumes significance with banks reporting large scale fraud cases and the high number of bad loans or non-performing assets.

        The CVC is getting a review done of central statutory reports, concurrent auditors’ reports and other auditor reports through chief vigilance officers of all public sector banks and insurance companies.

        “The same (audit reports) are analysed 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 CVC to check corruption and other fraudulent activities in an organisation.

        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 given by the Finance Ministry in the 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 to 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 with loan frauds and Red Flagged Accounts (RFA).

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

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