New Delhi: The Reserve Bank of India (RBI) Executive Director Ajay Kumar Choudhary has recently raised concerns over the rising incidents of banking fraud in the country. In a speech at an industry event, Choudhary highlighted the need for banks to adopt stricter risk management practices and emphasized the importance of improving internal controls to prevent fraud.
According to Choudhary, the banking sector has witnessed a surge in fraudulent activities in recent years, ranging from loan frauds to cyber frauds to identity theft. He pointed out that such frauds not only have a financial impact on banks but also erode customer trust and confidence in the banking system.
Choudhary urged banks to focus on improving their fraud detection and prevention mechanisms by leveraging technology and implementing robust risk management practices. He emphasized that banks must conduct thorough due diligence while underwriting loans and scrutinize the financials of borrowers to ensure that they have the ability to repay the loans.
The RBI executive director also highlighted the importance of effective governance and risk management practices in preventing frauds. He called for banks to establish a culture of compliance and transparency, where employees are trained to identify potential frauds and report them to the relevant authorities promptly.
Choudhary also stressed the need for collaboration between banks and regulators to combat frauds effectively. He suggested that the RBI could play a more proactive role in conducting regular audits and assessments of banks’ risk management systems and also establish a centralized fraud registry to track fraudulent activities across the banking system.
In conclusion, Choudhary’s speech highlights the need for banks to take a more proactive approach to prevent and detect frauds. He suggests that banks must focus on implementing robust risk management practices, leveraging technology, and establishing a culture of compliance to prevent frauds. The RBI executive director’s call for greater collaboration between banks and regulators also underscores the importance of a coordinated effort to combat frauds effectively.
