in far flung areas of the country. for this purpose, the fraudsters generally use deposit accounts in banks with lax kyc drills or accounts which remain inoperative for long. banks, therefore, not only need to caution their customers to guard against such temptations for easy money but should also ensure that deposit accounts maintained with them are fully kyc compliant. in fact, inadequacy of kyc drill would render any subsequent investigation process meaningless. the banks should also have a system of generating alerts to monitor transactions in accounts which are inoperative for long or where transactions are not in conformity with general trend and customer risk profile. rbi, as a part of its financial literacy programme, constantly seeks to caution the general public through print media, electronic media and on its web site not to get enamored by the false promises made in such e - mails. 16. i would like to reiterate here that though the amount involved in technology related frauds may not appear to be menacing when viewed in the backdrop of the total value of daily transactions and overall business prolife of the indian banks, any dent in the confidence of the stakeholders in the banking system will result in huge reputational and operational risks for the banks, adversely affect public perception and undermine faith in the financial system. if the banks are not able to proactively manage the technology risks in their delivery systems, they may have to face litigations on customer protection and also incur the wrath of the regulators and customer interest groups. apart from enlisting active co - operation from their technology vendors, banks must look to build a close rapport with other banks, investigative agencies and regulators to ensure that there is prompt and coordinated exchange of information, whenever required. with the spread of mobile banking, banks would also need to closely engage with the telecom service providers for reducing the technology related fraud risk. banks could also consider seeking insurance coverage as a risk transfer tool and a mitigant for the financial losses arising from technology induced fraudulent customer transactions. frauds in banks ’ advances portfolio 17. as i mentioned earlier, frauds related to the advances portfolio accounts for the largest share of the total amount involved in frauds in the banking sector. increase in the cases of large value fraud ( involving amount of rs. 50 crore and above ) in accounts financed under consortium or multiple banking arrangements involving even more than 10 banks at times, is a newly emerging, but unwelcome trend in the banking sector. another

funds be a basis for defining a borrowal account as fraud? in my opinion, so long as the borrower does not dispute that he owes money to the bank, it may not be termed as “ fraud ”. i believe there is a good enough reason to revisit the definition of “ fraud ” in the banking context. fixing of staff accountability 21. another area demanding urgent attention of banks is fixing of staff accountability. our analysis has revealed that this is a neglected area so far as public sector banks are concerned. the general trend in such cases is to include a large number of officials in the probe so that the investigation is both delayed and diluted. even in instances where investigations are concluded, there is a tendency to hold only the junior level officials involved in post disbursement supervision account and ignore the lapses on the part of higher officials who were involved in sanctioning of the advances, unless of course, the case becomes a high profile one or if some personal vengeance is involved. our experience is that the accountability examinations do not comment on lapses of sanctioning officials even while the fraudulent intentions of the borrower might have been overlooked by the sanctioning officials ab initio. i have heard arguments such as how can the board or the top management be expected to conduct post disbursal supervision? it can, at best, create a structure that ensures that the post disbursal supervision is properly conducted. i can accept the argument to a certain extent but if the structure created by the board / top management fails to do its job properly, who should be held accountable? the limited point that i want to make is, if the board / senior management does not have the time to conduct post disbursal supervision, why not delegate the sanction authority also to a lower level. 22. i have another issue regarding fixing of staff accountability in advance related fraud cases. we have observed that in the same case of consortium / multiple financing, while staff accountability is established in a few banks, in several others, the banks do not find any staff involvement. to me, this defies logic. how can the banks shift the onus of conducting due diligence on the consortium leader and blindly follow whatever the latter does? 23. i believe there is a pressing need to probe staff accountability in a fair and objective manner and take it to its logical conclusion. this is necessary to instill a sense of responsibility amongst the officials for complying with