NEW DELHI, Oct 5: The Finance Ministry has asked public sector banks to tighten norms, including KYC monitoring for high-value fixed deposits, to check the kind of frauds suspected to have been committed at Dena Bank and OBC.
The ministry would like banks to make a full-proof arrangement for high value fixed deposits, including due diligence of know your customer (KYC) details, sources said.
Banks have been advised to categorise fixed deposits, which may fall under high value criteria, sources said.
At the moment, different banks have varied definitions of high value fixed deposits.
As per the preliminary forensic audit report, a fraud to the tune of Rs 436 crore in two public sector banks- Dena Bank and Oriental Bank of Commerce– have been committed through multi-layer system. It is suspected that there were some money laundering.
The lenders are also alleged to have indulged in siphoning off the money (Rs 180 crore by OBC and Rs 256 crore by Dena Bank) received as fixed deposits.
Besides, the Finance Ministry has asked the Reserve Bank to tighten lending norms to prevent borrowers from opening multiple current account outside their consortium banks in the light of Kingfisher case.
There are a few instances where defaulting borrowers indulged in diversion of funds by opening multiple current account outside the members of the consortium, sources said.
Therefore, sources said, the Finance Ministry has urged RBI to tighten the norms and monitoring system so that such activities could be prevented.
According to sources, Kingfisher Airlines allegedly diverted funds by opening a current account in HDFC Bank and had a balance of Rs 7.5 crore as on date.
This fact was not known to the consortium of lender headed by State Bank of India. These banks have an outstanding debt of Rs 6,521 crore from the now-grounded carrier.
Such diversion can be monitored by Reserve Bank as it is sector regulator and there is need to strengthen the monitoring mechanism, sources said.
There has been a spate of defaults in the banking system. Majority of them are due to slow economic growth but there is small proportion of cases where defaults are intentional.
Recently, the Finance Ministry had ordered limited forensic audit into some non-performing accounts of Kolkata- based UCO Bank to find out whether there were any irregularities in sanction of loans. (PTI)
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