Yet another Bank Fraud.. What will RBI say?

Bank frauds have been so common in India that it hardly surprises any body when a new fraud is reported. The Banks are after technology in a hurry and RBI has either no clue to the risks or is just unable/unwilling to regulate the banks as we have frequently pointed out.

The reason for the situation is that RBI has not been implementing its own regulations to secure Banking in Cyber Space and Banks have effectively silenced Adjudicators and the Cyber Appellate Tribunal so that fraud victims are unable to get justice.  The “Lawlessness” is so palpable that cyber criminals are emboldened to try commission of frauds at every opportunity. RBI in the meantime is busy diluting the security in cyber banking and remaining silent when non compliance of law is brought to their notice.

To bring the discussion to the context, TOI reports today that “Anti-Nationals pull off Rs 6.9 crores” using cloned and stolen cards. What the report fails to recognize is that the cloned cards were one of the instruments used and the other major instrument used was “Bank Accounts” opened by the fraudsters in some Bank/s (Name of the card issuing Banks and the money receiving not revealed in the article). These Banks have opened the accounts without proper KYC and are mainly responsible under Anti Money Laundering as accessories/abetters to the fraud.

The report states that the fraudsters were Dubai based and hence they were “Anti Nationals”. But what about the Banks which opened the accounts for these Anti-Nationals? Are they also not “Anti Nationals”?

The main culprits in such cases of KYC failures leading to frauds are AXIS Bank and ICICI Bank with PNB and SBI not far behind.

Will RBI name and shame these Banks? Will it dismiss or take disciplinary proceedings against the Chair Persons of these Banks instead of the Governor dining with them with IMF dignitaries?

The fraud is an indication of lack of security in the Banking system for which RBI is solely the custodian. It appears that Mr Raghuraman Rajan has failed to assume responsibility for the security of Banking and has to start looking at this part of his role also. If he wants to remain only as an Inflation Monitor, Government needs to look at creating another organization that is solely responsible for regulating the security in the Banking system and take this responsibility away from RBI.


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About Vijayashankar Na

Naavi is a veteran Cyber Law specialist in India and is presently working from Bangalore as an Information Assurance Consultant. Pioneered concepts such as ITA 2008 compliance, Naavi is also the founder of Cyber Law College, a virtual Cyber Law Education institution. He now has been focusing on the projects such as Secure Digital India and Cyber Insurance
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