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Blood of Bank fraud victims are on these hands...

[P.S: This article is in continuation of my previous article titled: Indian Media is Insensitive..here where I had pointed out how increasingly E banking frauds are affecting the health of banking victims and why certain persons should be considered responsible for the bloodbath ].

When an E banking fraud consumes a bank victim, the first person who is responsible is the Chairperson of the bank. If there is another CEO for the Bank, then both of them should be held liable.

The reason is that the CEO of the Bank is the person who is ultimately responsible for the loss of the victim. The CEO is responsible for

a) The E banking system being insecure and lends itself to E robberies very easily.

b) The Bank uses the system of password authentication for Banking which is not authorized either by law or practice since neither ITA 2008 nor RBI supports the password system of authentication.

c) There is lack of risk management software support to E banking (including lack of CCTV and physical security in Banks and ATMs)

d)The KYC in beneficiary accounts have failed

e) His branch managers failed to pursue their complaints with the Police

In a typical E Banking fraud a combination of all these factors lead to the successful commission of the fraud.

I refer to the email from a customer of Punjab National Bank referred to in my previous article which is partially reproduced here for reference:

" My name is V..... M..... and I am a school teacher at S.... School in Thane. Two years bach rupees 10 lakhs were stolen from our internet account. You can imagine what a shock it was. So much that my husband had a heart attack and underwent a bypass a month after the theft.
The robbers made 51 transactions in 4 days and transferred the entire amount to seventeen different accounts. 

.... "

We can observe here that 51 fraudulent transactions  were carried out and money was transferred to 17 different fraudulent accounts. It is most probable that all these 17 accounts were also in Punjab National Bank itself in different branches.

In a similar incident in Chennai where two customers of Punjab National Bank lost Rs 8 lakhs there were about 20 fraudulent transactions. In another incident in Axis Bank, Bangalore, 39 lakhs were siphoned off in about 14 different accounts half of which were in the same Bank. In another incident in Noida, Rs 1.65 crores were transferred out of a Punjab National account to about  7 fraudulent entries one of which was a single massive withdrawal of Rs 81 lakhs. There are other cases in ICICI Bank, SBI, HDFC Bank etc where the number of fraudulent withdrawals were between 1 to 5.

I would like the Chairpersons of the Banks some of whom have sat in the chairs of officers in the manual banking era passing cheques to touch their hearts and tell me if they would have passed these transactions if they had been in the form of cheques without raising an alarm and making suitable enquiries.

If not,

how do they allow laxity in processing of similar transactions in e-form ?

Is it because they are ignorant of the E-form of banking? Or

Is it because they consider it too expensive to have a risk management software? or

Is it because the software supplier is not capable of supplying?

Is it because they are not concerned with "Safe Banking"? or

Is it because the loss is anyway being hoisted in the customer  and not the Bank?

I am aware that some of the CEOs or Chairpersons who are heading the banks today might have never sat in the officer's desk and hence may not understand the importance of what I am implying and I want them to check with their colleagues who have adequate experience about what is "Negligence of a Paying Banker under Section 85 of Negotiable Instruments Act"? and What is "Negligence of a Collecting banker under section 131 of the Negotiable Instruments Act". They will then realize if the cause of the E Banking frauds could be attributed to "Negligence of the banker" (Whether it is the Paying banker where the victim's accounts are maintained or the Collecting Banker where the fraud beneficiaries maintained the accounts and the laundering of the fraud money took place.

I would also like faculty members in Bank training colleges to send a note on the points I have raised above to their respective Chair persons. BTC should also send a note on similar lines to the Governor and Deputy Governors of RBI and to the Chairman of IBA. 

This education of the Bank Chairpersons is necessary because the current generation of Bankers donot seem to be doing "Banking" but are conducting only an a E Commerce business. This is not banking as per the definitions under which RBI runs the country's Banking system and for which licenses have been issued to banks. RBI is also failing in its duty to recognize that "Internet Banking" is not being conducted as per the guidelines issued by them where Internet is a channel for "Banking" business and is bound by all the principles of traditional banking.

I therefore consider the Bank Chairpersons as primarily responsible for the E Banking frauds and if any of their customers have lost their life, Bank Chairpersons should consider themselves guilty of causing these deaths.

I look forward to Chairpersons like Chanda Kochchar of ICICI Bank, Kamat of PNB, Shikha Sharma of Axis Bank and other Chairpersons to respond and convince me that they have not been negligent in discharging their duties .

I want them to present to the public a list of E Banking frauds that has occurred in their respective Banks during their regime and find out if all their victim customers are still alive.

I am sure that the list of fraud incidents in each of these Banks will be long though I wish that none of the customers are in their graves as of today.

I want the shareholders of these Banks to raise this issue in the next AGM of these banks and ask them if the shareholder is also a depositor, whether he should continue to keep his savings in these banks.


(To be continued)

Previous article: 1. Indian Media is Insensitive..here


February 26, 2012