The exhaustive CVC docket on Top 100 Bank Frauds provides many insights on the large canvas on which fraudsters are operating in India. Notably the fixed deposit fraud is unique and monotypical in this regard. The miscreant pretended to the government organisations/corporates as representative of a bank and to the bank as financial advisor of these organisations/ corporates, brought bulk deposits to the branch of different banks. He kept the original TDRs (term deposit receipts) issued by the branches with them and submitted fake copies to the depositors. Thereafter the miscreant opened loan/overdraft accounts in the name of depositors by submitting fabricated documents along with original TDRs to the branch. They had siphoned off the money through RTGS (real time gross settlement) in his various associate accounts with different banks.
*The deposits were canvassed by the branch manager through a private person and mobilised bulk deposits of about Rs 604.33 crore through the private person from the seven government organisations/corporates.
*Term deposits accounts were opened at the branch after obtaining KYC documents from the organisation concerned. The KYC documents were received through the private person. Term deposit receipts (TDR) were delivered on the basis of the organisations/corporate authority letters.
*Later on the private person submitted application for loan, purportedly made by organisation/corporate holding deposits with branch for loan / overdraft against TDR.
*The loan applications accompanied with original TDR receipt, duly discharged by the signatories who had signed the documents earlier submitted to the branch. The sanctioning authority, after completing the necessary formalities, sanctioned the loan/overdraft.
*The fraudsters acted as representatives of the organisations, created a forged fixed deposit receipt and handed over the same to the beneficiaries. Subsequently, the original deposit receipt was utilised by the fraudsters for availing loan against the deposit without the knowledge of the organisation.
*While disbursing the loan amount, letters of request for RTGS transfer to parties or cheques duly signed by the authorised signatories were received from the organisations/ corporates.
*The private persons with assistance of other unknown persons falsely represented themselves to the government organisations/corporates as representative of bank and to the bank as financial advisors of the organisation/corporates.
*While collecting the KYC documents from the organisations/ corporates, presumably retained the original documents with them and generated fake documents of KYC, signatures, stamps, letter heads etc, purported to have been prepared by organisations/ corporates concerned and handed over to the banks.
*After collecting the original TDR receipts from the banks, private persons presumably retained them and handed over photocopies to the organisations/corporates concerned.
*To avail a loan against original TDR retained by them, they presumably created fabricated documents on the basis of the documents submitted to the banks earlier. Original TDR duly discharged by the authorised signatories accompanied the loan applications.
*The branch managers without assessing the genuineness of these apparently looking genuine documents acted on the mandate and recommended/sanctioned loan against TDRs and also remitted the money to various accounts in several banks as per the mandate.
*RTGS for opening TDR accounts were sent by the organisations/corporates to the banks but they declined having ever applied for loan/ overdraft availed. It also transpired that the private persons presented themselves as representatives of bank and collected various papers/documents from organisations/corporates.
*It is also suspected that current accounts were also opened at the branches in the name of organisations/corporates where funds by way of RTGS were received and disbursed by RTGS transfer to various other banks.
*Proper due diligence and precautions should be taken by the branches while dealing with the bulk deposit accounts opened in the names of organisations, corporates and public sector undertaking etc. The bank’s systems and procedures should not be diluted.
*Branches, on receipt of bulk term deposits of Rs 1 crore and above, should report the complete details of such deposits to treasury management department. In the said report branch should also confirm that KYC guidelines have been complied with.
*Controller should critically go into on the quality of business booked by branches and sudden spurt, if any, observed in business growth should be thoroughly investigated.
*Branch manager should inquire about customers’ requirement and brief them about the details of loan/overdraft schemes such as rate of interest, maximum eligible amount of loan, requirement of signatures, KYC documents etc.
*For limited companies, trusts, associations, co-operative, it should be ascertained whether the company /director/trustees/office bearers having borrowing powers and the extent of these powers. The copy of the necessary resolution passed by the borrowing organisation for borrowing against the fixed deposit receipts should be obtained.
*Bank should not depend on private person for accepting the bulk deposits. Officers to verify details of organisation /corporate and verify the signature of all the joint holders as per bank record.
*Bank officer should obtain requisite documents executed in person from the applicant and enter the proposal in loan sanction register along with original TDR.