BI/2014-15/303
DCBR.CO.BPD.(PCB). Cir No 2/12.05.001/2014-15
November 13, 2014
The Chief Executive Officer
All Primary (Urban) Co-operative Banks
Dear Sir / Madam,
Cheque related fraud cases –
preventive measures
The rise in the number of cheque related fraud
cases is a matter of serious concern. It is evident that many of
such frauds could have been avoided had due diligence been observed
at the time of handling and/or processing the cheques and
monitoring newly opened accounts. Primary (Urban) Co-operative Banks (UCBs)
are, therefore, advised to review and strengthen the controls in the cheque
presenting/passing and account monitoring processes and to ensure that all
procedural guidelines including preventive measures are followed meticulously
by the dealing staff/officials. Given below are some of the preventive measures
UCBs may follow in this regard. The list is only indicative.
I.
Ensuring the use of 100% CTS – 2010 compliant
cheques.
II.
Strengthening the infrastructure at the
cheque handling Service Branches and bestowing special attention on
the quality of equipment and personnel posted for CTS based clearing, so that
it is not merely a mechanical process.
III.
Ensuring that the beneficiary is KYC
compliant so that the bank has recourse to him/her as long as he/she remains a
customer of the bank.
IV.
Examination under UV lamp for all cheques
beyond a threshold of say, Rs.2 lakh.
V.
Checking at multiple levels, of cheques above
a threshold of say, Rs. 5 lakh.
VI.
Close monitoring of credits and debits in
newly opened transaction accounts based on risk categorization.
VII.
Sending an SMS alert to payer/drawer when
cheques are received in clearing.
The threshold limits mentioned above can be
reduced or increased at a later stage with the approval of the Board depending
on the volume of cheques handled by the UCBs or it’s risk appetite.
2. In addition to the above, UCBs may
consider the following preventive measures for dealing with suspicious or large
value cheques (in relation to an account’s normal level of
operations):
a) Alerting the customer by a phone
call and getting the confirmation from the payer/drawer.
b) Contacting base branch in case of non-home
cheques.
The above may be resorted to selectively if
not found feasible to be implemented systematically.
3. It has been reported that in some cases
even though the original cheques were in the custody of the customer, cheques
with the same series had been presented and encashed by fraudsters. In this
connection, UCBs are advised to take appropriate precautionary measures to
ensure that the confidential information viz., customer name / account
number / signature, cheque serial numbers and other related information
are neither compromised nor misused either from the bank or from the vendors’
(printers, couriers etc.) side. Due care and secure handling is also to be
exercised in the movement of cheques from the time they are tendered over the
counters or dropped in the collection boxes by customers.
Yours faithfully
(Suma Varma)
Chief General Manager