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no/RM (FRMC)/206 1202I -22 06/0912021

AII Brqnch/Offices in Indio

Sub: "Hond Book on troud Risk Monoq9mgnl"

We ore pleosed to inform thot "Hond Book on Froud Risk Monogemenl" hos
been complied ond published by Froud Risk Monogement Cell, Risk
Monogement Dept., Heod Office.

The Hond Book is o collection of reported froud coses ocross multiple business
segments/chonnels of our bonk viz. Advonce, Deposit, Cyber Frouds etc.
Modus Operondi of the froudster(s) hos/hove been mentioned ogoinst eoch
type of froud olong with suggested Preventive Meosures/Leorning Points.

RBI guidelines mondote strict timelines for reporting of frouds hoppening in

Bonks. A section hos been odded "Whol to Do Upon Deleclion of Froud?" for
guidonce ond reference to oll stoff members for timely reporting of frouds. The
reporting ,of Poyment Reloted Frouds CIs per RBI - CPFIR (Centrol Poyment
Froud lnformotion Regislry) Guidelines hos olso been covered in o seporote
section io give o more detoiled insight.

This Hond Book will be useful to oll field functionories os well os the officiols
posted of vorious odministrotive offices to dischorge their roles ond
responsibilities more vigilontly. We olso request oll the stoff members to go
through the Hond Book meticulously ond sensitize others including fhe
customers regording multitude of frouds.

A copy of the soid Hond Book is ottoched herewith for informotion of oll
concerned.

A*J*h\nqS'
(Amolesh Tripothi)
Assistont Generol Monoger

V.
- Risk Monogement Deportment

Encl: Hand Book on Fraud Risk Management

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UCO Bonk, Risk Monogemenl Depti. Heod Otfice, I sl Floor,l0. Brobourne Rood Kolkoto-700001
 FRAUD RISK MANAGEMENT CELL
RISK MANAGEMENT DEPARTMENT
UCO BANK HEAD OFFICE
10, BTM SARANI, KOLKATA – 700 001

For Internal Circulation Only

August 2021

i
 UCO BANK
HEAD OFFICE
FRAUD RISK MANAGEMENT CELL
RISK MANAGEMENT DEPARTEMENT

HANDBOOK ON FRAUD RISK

MANAGEMENT

This booklet is not an official document of the Bank and is meant for the purpose of
training only. Though all care has been taken to ensure accuracy, in case of any variation,
Bank’s guidelines, circulars and policies would prevail.

ii
अतुल कुमार गोएल
प्रबंध निर्दे शक एवं
मुख्य कार्यपालक अनधकारी
Atul Kumar Goel
MD & CEO
MESSAGE

I am pleased to know that our Risk Management Department is bringing out an

updated version of its Hand Book on Fraud Risk Management.

This updated version of Hand Book on Fraud Risk Management has been compiled
by Fraud Risk Management Cell from the most recent types of fraud incidents
perpetrated in our Bank as well as in the banking sector as a whole.

It is seen that the number and amount of frauds in banking sector has increased at a
faster pace in the recent past. RBI has also shown its concern in their Risk Based
Supervision Reports of our Bank, about the increasing trend of frauds. I hope this
handbook will help our field functionaries to curb the rising incidences of fraud in
our bank. This will also help officials at controlling offices to have a more efficient
approach in monitoring and mitigation of all types of possible frauds and related risk
thereof.

At this juncture, I would like to let you all know, we are already in the process of
implementing Enterprise Fraud Risk Management System (E-FRMS) in our bank.
This system will be able to recognize/identify the fraudulent transactions undertaken
by the fraudsters across different banking channel.

I appreciate the earnest efforts put by the Risk Management Department in bringing
out this revised and updated edition of Hand Book on Fraud Risk Management.

With best wishes,

(Atul Kumar Goel)

MD & CEO

iii
Ajay Vyas
Executive Director

MESSAGE

We all know that fraud and more so, the financial frauds have been in existence for a
very long time. As per a recent RTI report received from RBI, by a RTI activist-
cumulatively, banks in India suffered frauds worth Rs 4.92 trillion as of March 31,
2021, or nearly 4.5 per cent of the total bank credit. The data showed that almost 90
banks and financial institutions, reported a total of 45,613 cases of loan fraud till
March 31, 2021.

I am glad to inform that we are already in the process of implementing Enterprise

Fraud Risk Management System (E-FRMS) in our bank. Dissemination of
perpetrated as well as attempted fraud data among member banks will help in
creating a robust fraud data base with details of modus operandi of fraudsters &
preventive measures for such type of frauds.

This Hand Book on Fraud Risk Management envisages root cause analysis and
preventive measures to plug off different types of fraud incidents, we have
experienced.

I am sure that this Hand Book on Fraud Risk Management will be helpful to field
functionaries and will enable them to perform their duty more vigilantly.

The Risk Management Department has done a laudable job in bringing out the
updated version of Hand Book on Fraud Risk Management and I sincerely appreciate
their efforts.

Wish best wishes,

(Ajay Vyas)
Executive Director

iv
 इशराक अली खाि
कार्यपालक निर्दे शक
Ishraq Ali Khan
Executive Director

MESSAGE

I am glad to know that our Risk Management Department has come out with such
Handbook on Fraud Risk Management covering major incidents experienced during
the recent period. This handbook has also taken into account the root causes of
fraud, the various modus operandi and its prevention. An employee who is well
aware of frauds can safeguard funds of bank as well as can educate the customer to
safeguard theirs.

The Reserve Bank of India has initiated many customer awareness measures for
safeguarding them from various type of banking frauds, predominantly from
online/cyber frauds.

I hope this Hand Book on Fraud Risk Management will help officials of UCO Bank in
effective management of frauds.

As the eternal proverb goes “Prevention is better than Cure”, the types of frauds
encompassed in the handbook along with their prevention details will help in early
detection and prevention of frauds in the bank.

I congratulate the Risk Management Department for bringing out the updated
version of Hand Book on Fraud Risk Management.

With best wishes,

(Ishraq Ali Khan)

Executive Director

v
Ranjana Bose
Chief Vigilance Officer
MESSAGE

It is indeed strange to use the word delightful when it pertains to fraud but the
initiative taken to compile the various arenas and conduits for committing frauds is
nothing short of delightful! A positive and healthy trend is converting frauds into
near misses, armed with the knowledge of where to be extra vigilant and how to
recognize patterns of suspicious activity in our day to day work life. The Handbook
on Fraud Risk Management serves to do just that!

Our efforts to increase „near misses‟ is also directly proportional to the success of the
drive under “Alert UCOite” where instances of fraud prevention are sought to be
shared by officers working at ground zero and the officer concerned felicitated for
the same. Each and every employee serves as a bulwark against frauds.

It is imperative to concentrate on two further aspects of identification of the modus

operandi of a fraud. One, of course, is suggested systemic improvements which go
one step ahead and beyond preventive vigilance. It is not possible to improve one
dimension without addressing or modifying other related dimensions of a problem.
Which dimension directly effects an outcome when tweaked suitably is essential to
be decoded and applied to an event of a fraud?

Secondly, it is no secret that there is occurrence of frauds of a pattern already dealt

with before. Did identification of a fraud then not get translated into systemic
improvements at ground level? Why were loopholes not plugged in firmly enough
to prevent a recurrence of the same?

Let identification be a crucial yet a first step in ensuring how we look at and deal with
frauds.

With best wishes!

(Ranjana Bose)
Chief Vigilance Officer

vi
 नर्दलीप कुमार मृधा
महाप्रबंधक
Dilip Kumar Mridha
General Manager
MESSAGE
It is my great pleasure to introduce this revised and updated version of Hand Book
on Fraud Risk Management.

Reputation for integrity is crucial to safeguard market confidence and public trust for
any Financial Institution. Unfortunately, frauds can seriously undermine such efforts,
exposing an organization to legal, regulatory and reputational damage. While
achievement of business objectives is the primary objective of Banking Business, the
rising cases of frauds in banking sector is also a serious concern of all stakeholders.

Banks have been advised to implement comprehensive Enterprise Fraud Risk

Management Systems (E-FRMS). Our Bank is also in the process of implementing the
same shortly.

This Handbook on Fraud Risk Management is a meticulously compiled collection of

some recently perpetrated frauds in the financial arena, particularly in banking sector.
Root causes Analysis and Modus operandi of the fraudsters, precautions/preventive
steps to avoid such frauds in future is mentioned against each type of the frauds, for
creating awareness among field functionaries.

This handbook will be helpful to the field functionaries to have additional

precautionary angle on fraud aspects, while working in the branches/offices to
safeguard the interest of the bank. They are also advised to guide/educate the
customers with regard to various types of frauds being committed in the industry.

Risk Management Department also warmly welcomes any type of suggestions

emanating from the staff members working in various branch/administrative offices
to have a more robust & proactive Fraud Risk Management Framework in our bank.

I appreciate the work done by Fraud Risk Management Cell in bringing out this Hand
Book on Fraud Risk Management.

With best wishes,

(Dilip Kumar Mridha)

General Manager
Risk Management Department

vii
 CONTENTS
Page
(A) Advance Related Frauds
1 Frauds in the area of Agriculture Loans 1
Frauds in Loan Against Warehouse Receipts/ Collateral
2 1
Manager
3 Frauds in the area of Gold Loans 3
4 Frauds in the area of Home Loan/ Mortgage Loans 5
5 Frauds in the area of Car Loans 6
6 General Frauds in the area of Corporate / Non Retail Loans 7
7 Fraudulent Loans with Forged Documents 9
8 Frauds reported in Cold Storage Advance 10
9 Frauds reported in UCO Securities Advance 10
(B) Deposit Related Frauds
1 Frauds in the areas of payment/collection of cheques 12
2 Frauds in the area of ATM Cards 13
3 Frauds in the area of Branch Operations 14
4 Frauds in Inoperative or Dormant accounts 15
5 Fixed Deposit Fraud 16
(C) Frauds involving Third Party Entities (TPEs) 18
(D) Online Frauds/Cyber Frauds
1 Phishing Links 20
2 Vishing Calls 20
3 Frauds using Online Selling platforms 21
4 Frauds due to use of Unknown / Unverified Mobile Apps 21
5 Frauds using Screen Sharing App / Remote Access 21
6 SIM Swap / SIM Cloning 22
7 Frauds by compromising credentials through Search Engines 22
8 Scam through QR scan 23
9 Impersonating through Social Media 23
10 Juice Jacking 23
11 Lottery Fraud 24
12 Online Job Fraud 24
13 Fake Advertisements for Extending Loan by Fraudsters 24
Money Circulation/Ponzi/ Multi-Level Marketing (MLM)
14 25
Schemes Fraud

viii
 Precautions to be taken for securing Online Financial
(E)
Transactions
1 General Precautions 27
2 For Device/Computer Security 27
3 For Safe Internet Browsing 27
4 For safe Internet Banking 28
5 For E-mail Account Security 28
6 For Password Security 28
7 Precaution to be taken by depositors 28
Framework for Central Payments Fraud Information Registry
(F) 30
(CPFIR)
(G) What to do upon detection of a Fraud?? 32
(H) Do’s and Don’ts – as a Banker 35
Epilogue 40

ix
 (A) ADVANCE RELATED FRAUDS
(1) Frauds in the area of AGRICULTURE LOANS
I. Modus Operandi –
 KCC loans were sanctioned without verifying KYC of the borrowers
and land records.
 Loans were availed by submitting fake KYC documents and through
impersonation.
 Agriculture Term Loan amount disbursed to borrowers saving
account or 3rd party account, which was later withdrawn without
creation of any asset.
II. Preventive Vigilance/Learning Points –
 KYC documents of the borrowers are to be verified with original
documents as well as online (wherever possible). Local area enquiry
is to be made in order to ascertain genuineness of the borrower
and ownership of the land.
 Visit to borrower‟s residence, land offered as security & place of
business must be done mandatorily before sanctioning of loan.
 Certificates of land holding should be verified online and while
sanctioning under tenancy agreement, branch has to check whether
the actual owner of the land has obtained any finance from other
banks for the same land.
 Land ownership details should be verified from JLRO/BLRO
certificates and additionally from Govt. websites, (i.e. Bhulekh in
Odisha, meebhoomi in Andhra Pradesh etc.) with the original
documents submitted.
 Land record details, Scale of Finance (as per SLBC/DLTC) should be
correctly assessed to check over-financing.
 Year-wise drawing power in KCC accounts should be maintained.
 In case of AGTL, end use must be ascertained. Payments are strictly
to be made on basis of proper invoices/quotations and directly to
such seller/supplier.
Frauds in Loan Against WAREHOUSE RECEIPTS/ COLLATERAL
(2)
MANAGER
I. Modus Operandi –
 Loans to ineligible farmers on basis of affidavits showing oral lease
with landholders. Signatures of the lessor not obtained on the
affidavits and KYC documents of lessor not verified by the Branch.

1
  CIBIL/ CRIF reports of borrowers not pulled/ kept in record.
 PSVR AGR of farmers not done to ascertain genuineness of the
loan.
 Over-financing to ineligible farmers/ borrowers without considering
yield per hectare as mandated by the Annual Credit Plan issued by
the DLTC/SLBC.
 Disbursements to Savings Accounts of the farmer instead of their
KCC accounts and subsequently remitting to other bank accounts
indicating indicates mis-utlisation of the funds financed by the
Bank.
 Stocks pledged with the Bank were sold out by borrowers in
collusion with the Warehouse owners without permission of the
Bank.
 Branch Head had sanctioned WHR loans beyond his delegated
lending power.
II. Preventive Vigilance/Learning Points –
 Regular inspection has to be conducted on quarterly interval by the
branch officials.
 Due diligence in respect of borrowers to be done before financing
against warehouse receipts.
 Individual farmers having their own land only are eligible.
Unregistered leased land farmers/oral lessee/ share croppers will
not be eligible.
 Warehouse registration details with WDRA (Warehouse
Development and Regulating Authority) or respective state
warehousing authority to be checked online. Also appropriate
license from local authorities, mandi license needs to be
ascertained.
 Bank official should insist adoption of eNWR (Electronic Negotiable
Warehouse Receipts) by the warehouses as soon as possible.
 During periodical stock/warehouse inspection, Books of account
and movement of sale proceeds to be verified from register of cold
storage.
 Monthly Report submitted by Collateral Manager (to the branch &
Zonal Office) should be properly scrutinized.
 Assessment of loan amount should be calculated in conformity with
the Annual Credit Plan applicable in the respective state.

2
  Before release of fund, confirmation of the Bank‟s interest marked
on the insurance policy to be obtained against the Bank‟s pledge
stock.
 To facilitate effective control of insurance of goods under deposit
with warehouse shall be till last day of the month in which validity
of the deposit is expiring.
Important Reference:
 CHO/ARBD/11/2018-19 dt 27/09/2018 “Financing against pledge of
warehouse receipts”.
 CHO/ARBD/01/2020-21 dt.08/04/2021“Policy And SOP on
Warehouse Receipt Financing“.
(3) Frauds in the area of GOLD LOANS
I. Modus Operandi –
 Borrowers in connivance with gold appraiser pledged spurious
Gold/Gold Ornaments/Jewelleries to raise finance under Gold Loan
Scheme.
 Missing of Gold Loan packets from the Branch.
II. Preventive Vigilance/Learning Points –
 KYC norms must be strictly complied with while opening of
accounts.
 All Gold/Gold Ornaments / Jewelleries pledged to raise finance
should be checked/valued by the empanelled Gold Appraiser.
 Gold ornaments / Jewellery and Coins should be kept in a Gold Safe
under joint custody of the Branch Manager and the Manager Cash
and the same should be kept in separate and distinct sealed cloth
packet for each account.
 Surprise checking of gold ornaments packets should be conducted
by officers from controlling office or neighbouring branches should
be deputed for surprise inspection of the gold loan packets
accompanied by an appraiser other than who had made the
appraisal during sanction of loan on quarterly basis.
 At the time of 'repeated and multiple' loans to a single borrower
against Gold Jewellery/Ornaments/Coins, the appraisal should be
performed by a different appraiser, wherever more than one
appraiser is empanelled with the Branch. In other cases, branches
may utilize the services of empanelled appraiser of nearby branch.

3
  Valuation report of Gold Jewellery/Ornaments/Coins should not be
obtained from the appraiser/valuer who happens to be either
borrower or relative of borrower.
 Branch needs to be careful while delivering the gold ornaments on
closure of gold loan accounts. It should be ensured that the gold is
returned to the borrower only against his proper acknowledgement.
 Whenever, the custody of gold Ornaments is transferred from any
custodian to any other officer/ staff, the same should be properly
recorded in the key movement register.
 In order to minimize fraud in gold loan, any Gold Loan account
when becomes overdue for repayment, reappraisal of Gold should
be done immediately from the Gold Appraiser other than the one
who appraised the purity at the time of sanction as stated in Master
Circular on Gold Loan.
 Periodic monitoring of LTV in Gold Loans to be done. Report is
available for same in SIM->Retail-> Report on monitoring of LTV
Ratio of Gold loan. In case the value of security goes below the
prescribed LTV (minimum 25%), recovery measures should be
initiated.
 Zonal Heads during their regular visits to these Branches should
also call for gold inspection register and ensure that the same is
maintained up to date.
Important Reference :
 CHO/ARBD/25/2020-21 dt 11/01/2021 “Standard Operating
Procedure (SOP) to be followed for safe keeping & inspection of
gold pledged under Agriculture Loans“
 CHO/RBD/64/2020-21 dt.01/01/2021 “Master Circular on UCO Gold
Loan Scheme (Retail)”
Guidelines/Precautions Regarding GOLD APPRAISER
 All the Branches where Gold Loan portfolio is more than Rs. 50 Lakh
or number of accounts are more than 100, the Branch should have
two or more appraisers attached and their services should be used
on random basis*.
 Review/Renewal of empanelment of Gold appraiser upon
completion of 3 years from empanelment or 750 gold loans,
whichever is earlier.

4
  In addition to that, maximum (gold loan sanction) amount by any
appraiser in a financial year would be Rs. 10 Crore.
 No appraiser should appraise more than 750 gold loans in a
financial year.
 In case, the branch is sanctioning more than 1500 gold loans in a
fiscal, a single appraiser can appraise up to 1000 gold loans
provided both appraisers have already appraised 750 loans.
 Branch should get prior permission from Zonal Office to enable any
appraiser to appraise more than 1000 gold loans in a fiscal.
 All the branches where Gold Loan portfolio is more than Rs. 50 lakh
or numbers of accounts are more than 100, the branch should have
two or more appraisers attached and their services should be used
on random basis.
 Due diligence on the appraiser should be undertaken by the
branches.
Important Reference :
 CHO/RBD/77/2020-21 DT 17/03/2021 “Empanelment and Review of
Gold Appraiser “
(4) Frauds in the area of HOME LOAN/ MORTGAGE LOANS
I. Root Causes/Modus Operandi –
 Borrowers obtained home loan by mortgaging the property.
Subsequently, the property mortgaged to bank was sold off without
the knowledge of the bank.
 Borrowers availed business loans by mortgaging agriculture land.
 The borrowers availed UCO Trader/ UCO Mortgage / Cash Credit /
UCO Home Loan by depositing fake title deed.
 The borrower managed to avail UCO mortgage loan on the
property already mortgaged to other bank.
 Fraudulent representation by impersonating the deceased
borrower.
 Laminated or Color Xerox of title deed deposited by the borrower.
 Submission of forged death certificate of land owner.
II. Preventive Vigilance/Learning Points –
 KYC norms must be strictly complied while opening of accounts.
 Examination of Title deeds of Immovable Property for the purpose
of creation of mortgage/security in favour of the bank vide Circular
No. CHO/LAW/09/2010-11 dt. 26/08/2011 & CHO/LAW/06/2014-15

5
 dt. 28/06/2014 to be followed scrupulously. Branches/Offices are
advised to bring this Circular to the notice of the empanelled
Advocates and Valuers to ensure that the guidelines/ check points
mentioned are meticulously looked into by them while examining
the genuineness of the title deed documents of property offered as
security/mortgage to the bank to avoid fraud scenario.
 Branches should invariably pull CIBIL report and it should form an
integral part of the process note.
 Branches should carry out due diligence on properties to be
mortgaged.
 Branches should confirm genuineness of the title deed with the
certified copy before accepting it as a mortgage based securities.
 Laminated title deeds should not be accepted as securities.
 All types of movable and immovable assets charged in favour of
secured creditors are to be registered with CERSAI (Central
Registry of Securitisation Asset Reconstruction and Security
Interest) registry. Charges on intangible assets like know how,
patent, copyright, trademark etc. are also to be registered with
CERSAI. Secured Creditors are required to file security interest on
CERSAI portal within 30 days from the date of creation of security
interest.
 Valuation of the property should be verified from other available
sources. (i.e. Estate Agents, 99acres.com,magicbricks.com etc.)
Important Reference :
 CHO/Law/06/2014-15 dt. 28/06/2014 Circular on Examination of
title deeds of immovable property for the purpose of creation of
mortgage/security in favour of the bank- Some Check Points,
 CHO/RM(FRMC)/12/2013-14 dt. 30/08/2013 Preventive steps to
check frauds in the area of Mortgage based loans
 CHO/RM(FRMC)/04/2021-22 dt. 13/05/2021 Fraud perpetrated in
our Bank/ Banking industry- Modus operandi and preventive
measures,
(5) Frauds in the area of CAR LOANS
I. Modus Operandi –
 Car loans sanctioned to ineligible borrowers. Fake/fabricated ITR
has been obtained from borrowers.

6
  Car loans were sanctioned mostly relying on middlemen/3rd party,
for borrower selection, KYC and other loan document collection,
PSVR etc.
 Car under hypothecation sold to other people by the borrower.
II. Preventive Vigilance/Learning Points –
 Originals of Salary Certificates and ITRs be called for and
genuineness verified from the concerned issuing
Authorities/Offices. Names; Addresses & other details in ITRs be
matched with KYC documents submitted.
 Do not entertain Middlemen under any circumstances whatsoever
may be.
 Periodical inspection of the hypothecated vehicle should be carried
out. Annual renewal of vehicle insurance to be ensured.
 Using of www.vahan.nic.in for checking of details of the car,
borrower and charge of the bank.
Important Reference :
 CHO/RBD/59/2020-21 dt.01/01/2021 Master Circular on Car Loan
Scheme
(6) General Frauds in the area of CORPORATE /NON RETAIL LOANS
I. Modus Operandi –
 Fraudulent borrowers were able to connive the bank with their
ulterior motives and diverted bank‟s fund.
 Fake/ fabricated IT and GST returns were submitted by the
borrowers. The GSTR-3B submitted to bank was not appearing in
the GST portal upon verification.
 The sales figure in the ABS was not tallying with the GST returns for
the same period.
 Borrowers transferred funds to parties with no business relations.
 Unit did not exist at the registered place of operation.
 The collateral was overvalued as per latest valuation report from a
different valuer.
 Borrower has submitted fake partnership registration, partnership
deed. On verification of same in Govt. website, the registration
number showed a different name.
 Multiple entries routed through interested entities for siphoning of
funds, inflated sales turnover, showing operations in banking
accounts.

7
  Potential overvaluation of fixed assets in earlier years and sale of
these assets without corresponding receipts of funds.
 Diversion of funds through transfer of assets. Funds were
repeatedly rotated between sister concerns.
 LOUs/FLCs were issued fraudulently without authorization utilizing
SWIFT system.
 Funds were not utilized for the purpose it was sanctioned.
II. Preventive Vigilance/Learning Points –
 Income Tax returns or GST returns submitted by the borrowers
needs to be meticulously checked by the bank officials. The Sales
figures in the ABS should be compared with the GST returns for the
same period.
 Proper monitoring of cash credit accounts to done to check fund
diversion. List of debit and credit transactions to be obtained and
scrutinised.
 Valuation reports submitted by the valuers needs to be compared
with the current market trends of the area where the
property/collateral is located. (Double checking may be done from
Magicbricks/99acres.com or similar websites/apps)
 Partnership registration details, (if any) should be checked from
relevant Govt. website.
 The Audited Balance Sheet and other financial statements of the
companies submitted to the Bank are to be verified with that
submitted with Registrar of Companies and other statutory bodies.
 For NBFC‟s, the returns submitted to RBI i.e. NBS-1,2,3,4,7,8,9, SAC
etc. should be obtained and scrutinized.
 The business activities of the borrower company should be
monitored through periodic visit to offices/units/ go downs etc as
per extant guidelines.
 Market enquiry about the prospective borrowers to be undertaken
before financing.
 Branch should ensure submission of Stock & Book Debt statements
by the borrower regularly and the same should be scrutinized
properly so that there is no slow & non-moving un-paid items
included in the statement.
 The Stock & Book Debt inspections should be conducted at regular
intervals and cross checked with bills/invoices.

8
  If the borrowing company is maintaining any current account with
other banks without our permission, matter should be taken up
with that bank for closure of such account.
 Report of transactions carried out through SWIFT to be generated
on daily basis for reconciliation.
 To monitor and ensure that assets are created out of bank‟s funds
are as per sanction terms. End use of funds to be ensured.
 Disbursement of term loans to be made to the suppliers/ service
providers and in accordance with progress of the work.
 For working capital, inflow and outflow funds should be scrutinized
thoroughly to identify whether the sales or purchase of inventory
are routed through the account.
 All types of movable and immovable assets charged in favour of
secured creditors are to be registered with CERSAI (Central Registry
of Securitisation Asset Reconstruction and Security Interest) registry.
Charges on intangible assets like know how, patent, copyright,
trademark etc are also to be registered with CERSAI. Secured
Creditors are required to file security interest on CERSAI portal
within 30 days from the date of creation of security interest.
 Authentication/Confirmation of LC/BG should be done over SFMS
only.

(7) Fraudulent Loans with FORGED DOCUMENTS

I. Modus Operandi –
 The „forged documents‟ frauds are frauds in which a person or an
entity uses forged documents for availing any form of services from
Banks/financial institutions.
 Such frauds happen because of sharing of KYC related documents
online/offline with officials without verifying their authenticity or
without verifying authenticity of the email id.

 Fraud loans are also sanctioned based on identity thefts by stealing

personal information of victims such as identity cards, bank account
details, etc., and using the information to get benefits from financial
institutions i.e. Banks etc. in the victim‟s name.
II. Preventive Vigilance/Learning Points –

 Customers should not share identity of any other financial

documents online without verifying authenticity of the

9
 officials/emails. Such details should only be shared with authorized
personnel or authorized email IDs of the entities.

 Upon non-sanction of loans, documents given by the customers

should invariably be returned.
(8) Frauds reported in COLD STORAGE ADVANCE
I. Modus Operandi –
 Term Loan amount was disbursed to the Current account of the
borrower and same was withdrawn by cash.
 Cash Credit loan was disbursed to the borrower before completion
of the project & same was siphoned by the borrower.
II. Preventive Vigilance/Learning Points –
 End use verification of funds has to be ascertained in advance
accounts.
 For term loans funds should be remitted directly to the account of
the suppliers after due diligence.
 Similarly in case of Cash Credit accounts frequent withdrawal of
cash has to be monitored.
(9) Frauds reported in UCO SECURITIES ADVANCE
I. Modus Operandi –
 Borrowers were able to defraud the Bank by releasing their LIC
policies from LICI, which were pledged with bank using fake
II. Preventive Vigilance/Learning Points –
 Fresh surrender value of the policy should be ascertained as on 31st
March each year.
 Due date of premia should be carefully diarised to ensure that the
premia on the Policy is regularly paid.
 In case of loan overdue/ default in payment by the borrower, steps
should be taken to adjust the loan from the surrender value of the
policy obtained from LICI. (after giving due notice to the borrower)
Important Reference:
 CHO/RBD/58/2020-21 dt.01/01/2021, “Master Circular on UCO
Securities” & Manual Of Instructions-Vol.-VI : Chapter 13

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11
(B) DEPOSIT RELATED FRAUDS
Frauds in the areas of PAYMENT/COLLECTION OF CHEQUES and
(1)
Transfer of Funds
I. Modus Operandi –
 Customer‟s account was debited by cloned cheque.
II. Preventive Vigilance/Learning Points –
 Adequate care to be taken while delivering cheque books to
customer/ to third party (based on authorization).
 Security inventory to be reconciled monthly.
 Place the CCTV camera to capture the cheque drop box.
 Report of transactions as per Risk Categorization of the customers
should be made available to branches for checking.
 Unused cheque leaves should be destroyed with proper justification
& be recorded against the acknowledgement of the customer
before issuing new cheque books.
 Field functionaries to be sensitized to be careful while passing
cheques in terms of signature verification, to contact drawers in
case of doubt.
 All high value cheques are to be checked under UV lamp for
ascertaining its genuineness.
 Mobile No. of account holder to be captured in finacle for real time
alerts.
 Request for fund transfer to be verified from the account holder
especially where large amount is involved. Due diligence to be
applied to verify customers identity.
 In order to minimize fraudulent transaction using clone cheque,
report on inward clearing to be generated invariably for verification
of instruments of Rs. 1.00 Lakh and above as stated in HO circular
No. CHO/SP/CSCELL/45/2018-19 dt.12/12/2018.
 Positive Pay System (PPS) : Customers should be
advised/educated to use the PPS facility for amounts 50,000 to 5
lakh too (after which it is mandatory as per RBI guidelines)
 No NEFT/ RTGS transfer request to be accepted if
application/cheque found to be dropped in Cheque Drop Box.
For transfer of funds through NEFT/ RTGS above Rs. 50,000/-,
account holder must visit the branch in person along with the
cheque and application. In case the account holder is unable to visit

12
 the branch, letter of authority from account holder should be
produced by his/ her representative. In such case, the account
holder to be contacted on his registered landline/ mobile number
through branch landline number to ascertain the genuineness of
the fund transfer request. Relevant KYC information pertaining to
the account such as Date of Birth, PIN Code, Father's/ Mother's
Name may be asked to cross verify with the available records at the
branch and the same is to be noted on NEFT/ RTGS Application
Form,
Cheque Amount Indicative Fraud Preventive
Measures
Above 1 lakh Check under UV Lamp
Above 3 lakh Check at more than one level
High value cheque (1 lakh Contact drawer of cheque over
& above) in either telephone to ascertain
clearing or transfer genuineness
 Bank has issued direction for issuance of New Personalized Cheque
Books with Random Number (Secret Code) to all SB & Current
Account customers (vide CHO/SP/CSCCELL/60/2018-19 dt.
24/01/2019) & Mandatory issuance of same to accounts with
deposits of Rs. 5.00 lakh & above on date 03/05/2019 (vide
CHO/SP/CSCCELL/06/2019-20 dt 03/05/2019.
 All Service Branches lo invariably contact the base branch for
alerting the customer by o phone call and getting confirmation
from the drawer in case of inward clearing cheque of Rs. 3 lakh and
above.
Important Reference:
 CHO/RM(FRMC)//2020-21 dt 01/06/2020 “Cheque Related Frauds -
Preventive Vigilance”.
(2) Frauds in the Area of ATM Cards
I. Modus Operandi –
 Customer account debited using cloned ATM card
 Fraudsters install skimming devices in ATM machines to capture
ATM card details of the customer.
 ATM Card PIN is also captured using a dummy keypad, hidden
small/ pinhole camera.

13
  Fraudsters can also gain access to the customers PIN using shoulder
surfing inside the ATM premises.
 This data is used to create a duplicate ATM Card to withdraw
money from the customer‟s account.
II. Preventive Vigilance/Learning Points –
 All the existing non-chip based debit cards to be replaced with
chip-based debit cards.
 ATM cards are to be kept under dual custody and to be issued to
the account holders after identifying their identity properly.
 Customer should be encouraged to use „UCO Secure‟ mobile App
to block/ unblock any digital services instantly without visiting the
branch.
 ATM cards inventory to be monthly reconciled and the same to be
certified by the concurrent auditors / Inspecting officers.
 High resolution CCTV cameras should be installed in ATMs and the
CCTV cameras should be in a good working condition. CCTV
monitoring with recording should be preserved at Zonal Office
Security department for at least 90 days.
 Periodical ATM premises inspection to be done to ensure no extra
device is attached near card insertion slot or keypad of ATM
machine.
 Customers should be made aware of “shoulder surfing” while
entering financial credentials at the ATM machine.
(3) Frauds in the area of BRANCH OPERATIONS
I. Modus Operandi –
 Cash stolen by clerical staff during working hours.
 Theft of gold packets from gold safe by house keeper cum peon.
 Theft of documents and security items
 Bogus credit entry in accounts without actual receipt of cash.
II. Preventive Vigilance/Learning Points –
 Only need based cash to be kept at the counter remaining cash
should be left in chest under joint custody.
 Staff members working in cash department should remain vigil
about the current cash position.
 Strong room where Cash vault, Locker and Gold safe is being kept
should be locked at all times.
 Vault keys should be kept under dual custody, and whenever there

14
 is any need to gain access in the vault it should be done in presence
of both the key holders.
 Sensitive areas of the branch including Cash Department should be
under CCTV surveillance. CCTV cameras should be in a good
working condition. CCTV monitoring with recording should be
preserved at Zonal Office Security department for at least 90 days.
 Finacle/System based teller wise Cash allocation to be made in
branches, particularly in Single teller branches.
 The check bogus Finacle entry of cash in accounts , cash deposit of
more than 5 lakh is to be entered and posted by two separate
Finacle users,
(4) Frauds in INOPERATIVE OR DORMANT ACCOUNTS
I. Modus Operandi –
 Inoperative or Dormant accounts of banks have always been on
target of fraudsters.
 First, such accounts are converted to Operative accounts by
fraudsters by impersonating themselves as the original customers
by submission of fake/Xerox copies of original KYC documents.
 Upon activation of such accounts, fraudsters have been successful
in withdrawing money from such accounts by forging original
customer‟s signature or using alternative delivery channels.
II. Preventive Vigilance/Learning Points –
 Branches should remain on high alert while dealing with Inoperative
or Dormant accounts.
 As per HO guidelines, Inoperative or Dormant accounts should be
made operative only after the request letter of the customer is
approved by the Branch Head of Deposit in Charge.
 Proper due diligence to be followed before activation and making
payment in such accounts.
 Effort should be made for activation and mobile number seeding of
such accounts. …
 Zero or Credit balance in loan accounts needs to checked
periodically from BS-5 and the same are to be closed if the entire
repayment has been received in the loan account.

15
(5) FIXED DEPOSIT FRAUD
I. Modus Operandi –
 Miscreants impersonated themselves as representatives of Govt.
Organisation /Corporates to the bank and vice-versa and brought
bulk deposits (in multiple of Crores) to the branch of different banks
from such organisations/Corporates.
 Term deposits were opened at the branch after obtaining KYC
documents from the concerned organisation. And TDRs were issued
 Later application for overdrafts against TDRs (with forged
signatures matching with the Original applications) were received
vide the representatives accompanying therewith original TDRs and
request letters for remittance for RTGS transfers.
 The miscreants had kept the original TDRs with them and handed
fake copies of the same to the organisations/corporates.
 In one instance, customer was issued fake (handwritten) FDR by
daily wager upon renewal. The FDR copy has been stolen by him
from the branch. The original FDR was closed and the amount was
fraudulently withdrawn by the fraudster using withdrawal slip he
has taken from the customer.
II. Preventive Vigilance/Learning Points –
 Proper due diligence and precautions has to be taken while dealing
with Bulk deposit accounts opened in the name of Govt.
organisations, Corporates, PSUs, etc.
 Bank officials should not depend on or entertain private persons for
accepting bulk deposits or dilute the extant KYC guidelines while
processing of such advances.
 Banks officers should try to obtain requisite documents executed in
person from the applicant/s or authorised signatories.
 Printed FDR should be issued to customers. FDR being a security
item should to be kept strictly under joint custody.

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17
(C) Frauds involving Third Party Entities (TPEs)
I. Modus Operandi –
 Bank‟s utilise services of various third party entities such as Lawyers,
Valuers, Chartered Accountants, Statutory Auditors, Gold
Appraisers, Techno-Economic Viability (TEV) consultants, Real Estate
Agents, Builders, Warehouse Owners, Motor Vehicle Dealers,
Agricultural Equipment Dealers for expert opinion, valuation,
attestation, confirmation and credit information for their credit
decisions.
 Sometimes these professionals / third parties provide inaccurate or
misleading information/ confirmation/ opinion to the bank resulting
in weakening of due diligence process which causes a substantial
loss on account of perpetration of frauds.
 Many times fraudulent borrowers collude with such third parties in
their ulterior motives and defraud the bank.
II. Preventive Vigilance/Learning Points –
 Third Party Caution List issued by RBI should be checked before
empanelment and renewal of third party services.
 Bankers should apply their own due diligence over the
reports/opinions submitted by the TPE‟s.

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19
(D) ONLINE FRAUDS/CYBER CRIME
The recent surge of digital modes of payment in the country in has
improved customer convenience to a great extent. This has also greatly
aided in achievement of national objective of financial inclusion. But, as
the modes of doing financial transactions are getting improved, the
numbers of fraud in retail financial transactions are also pacing up.
Common and gullible people, especially new entrants who are not entirely
familiar with the techno-financial eco-system are getting defrauded of
their hard earned money by the skilled fraudsters using innovating
methods.
(1) Phishing Links
I. Modus Operandi –
 A third-party website is created by fraudsters which bears a
resemblance to a genuine website such as Bank‟s website or e-
commerce website or search engine etc.
 The links are masked through authentic looking names of original
websites, and redirects customers to phishing website.
 Fraudsters circulate links of such pseudo websites/search engines
through SMS/ social media / email / Instant Messenger, etc.
 Most of the time, customers do not check the received url/link
carefully and enter their financial credentials in the phishing
website, which is then captured and used by fraudsters.
II. Preventive Vigilance/Learning Points –
 Unknown links received in SMS/Email should not be clicked and
such SMS/Email should be deleted immediately.
 Everyone should be careful and verify website details before
entering any financial credentials.
(2) Vishing Calls
I. Modus Operandi –
 Fraudsters call or approach customers through telephone call /
social media imposing themselves as bankers / company executives
/ insurance agents / government officials, etc. and seek
confirmation of secure credentials by sharing few details such as
name or date of birth to gain confidence.
 Occasionally, customers are tricked into urgent/ immediate sharing
of confidential details ( Card No/PIN/OTP etc.) by imposters citing
emergency, activation of debit card, payment of Govt. subsidy,

20
 blocking of customer uninitiated transactions, payment to stop
penalty charges, to get attractive discounts etc. These credentials
are then used to defraud the customers.
II. Preventive Vigilance/Learning Points –
 Customers should not share any confidential/financial information
such as username / password / card details / CVV / OTP/KYC details
with anyone posing themselves as Bank officials / financial
institutions / any genuine entity.
(3) Frauds using Online Selling platforms
I. Modus Operandi –
 At the online selling platforms, fraudsters pretend to be buyers and
show interest in a seller‟s products.
 They use “request money” option in UPI app, instead of “paying
money” and insist the seller to approve the request to withdraw
money from the sellers account.
II. Preventive Vigilance/Learning Points –
 Customers should be careful while making financial transactions for
online products.
 Customers should be made aware that, there is no need to enter
PIN/Password for receiving money in any UPI app/anywhere.
(4) Frauds due to use of unknown / unverified mobile apps
I. Modus Operandi –
 Fraudsters create malicious mobile apps using authentic looking
names.
 Links of such apps are shared through SMS / social media / Instant
Messenger, etc.
 Upon downloading of such app, fraudsters can gain complete
access of the mobile device and defraud customers.
II. Preventive Vigilance/Learning Points –
 Mobile Applications should not be downloaded from unverified /
unknown sources.
(5) Frauds using Screen Sharing App / Remote Access
I. Modus Operandi –
 Customers are tricked by fraudsters to download screen sharing
apps, though which fraudsters can watch/ control customer‟s
mobile / laptop and have access to customer‟s financial credentials.

21
  Fraudsters later withdraw money from the customer using internet
banking / payment apps.
II. Preventive Vigilance/Learning Points –
 Do not download screen sharing apps/links received from unknown
persons/sources.
 Don‟t use screen sharing feature with unknown people.
(6) SIM Swap / SIM Cloning
I. Modus Operandi –
 Now a days, most of the customer account details and transaction
authentications are linked with the registered mobile number of the
customer.
 Fraudsters try to gain access to the SIM card of the customer or
obtain duplicate/clone SIM Card for carrying our fraudulent digital
transactions using OTP received on the duplicate/cloned SIM.
II. Preventive Vigilance/Learning Points –
 SIM Card related credentials should not be shared with anyone.
 Customers should immediately contact Mobile Operator, in case of
absence of mobile signals in a regular environment for a
considerable time and ensure that no duplicate SIM is being issued
for the currently used SIM.
Frauds by compromising credentials on results through Search
(7)
Engines
I. Modus Operandi –
 Normally customers use search engines for obtaining contact
details of their bank, insurance company, Aadhar updation centres,
etc., and may end up contacting unknown / unverified contact
numbers displayed on search engine.
 Contact details on search engines are often camouflaged by
fraudsters to attract their victims towards them.
 The imposters seek card or other financial credentials of customers
for verification on call and use such data to defraud the customer.
II. Preventive Vigilance/Learning Points –
 Customer should always check official websites of Banks/
companies to get contact details.

22
 (8) Scam through QR scan
I. Modus Operandi –
 Fraudsters often contact customers under various pretence and
tricked into scanning of QR codes using payment apps, thereby
facilitating fraudulent withdrawal of money from customer‟s
account.
II. Preventive Vigilance/Learning Points –
 Customers should be educated and made aware to be cautious
while scanning any QR codes using payment apps.
(9) Impersonating through Social Media
I. Modus Operandi –
 Fraudsters create fake account on popular social media platforms
like Facebook and Instagram impersonating as someone else.
Thereafter they request money from the friends of the
impersonated person citing urgent medical purposes, payments,
etc. and defraud them.
 Fraudsters can also use the private information shared with them
for extortion or blackmail purpose.
II. Preventive Vigilance/Learning Points –
 Do not make payments to unknown persons online.
 Do not share personal and confidential information on social media
platforms.
 Always verify genuineness of fund request with the friend / relative
or confirm by a phone call / physical meeting to be sure that the
profile is not impersonated.
(10) Juice Jacking
I. Modus Operandi –
 The charging port of a mobile device, can also be used for transfer
of files / data.
 Juice jacking is a type of cyber stealing, where, once your mobile is
connected to unknown / unverified charging ports, unknown apps /
malware are installed with which, the fraudsters can control / access
/ steal sensitive data, email, SMS, saved passwords.
II. Preventive Vigilance/Learning Points –
 Always avoid using charging ports / cables at public or unknown
places.

23
 (11) Lottery Fraud
I. Modus Operandi –
 Fraudsters send email or calls, to customers mentioning them of
winning of huge lottery. Such customers are asked to confirm
identity by verifying through bank account/credit card on their
website from which data is captured.
 In some cases, such customers are asked to pay nominal taxes or
shipping charges, processing fee, etc. to receive the lottery /
product, which if deposited by customer results into fraudulent
withdrawal.
II. Preventive Vigilance/Learning Points –
 No payment or sharing of any secure credentials should be done
over lottery related calls/emails.
(12) Online Job Fraud
I. Modus Operandi –
 Fraudsters create fake job search websites for luring job seekers
into sharing of secure credentials of bank account / credit card /
debit card on these websites for registration, which is then used to
defraud them.
 In some cases, fraudsters impose themselves as officials of a
reputed company and confirm selection after doing fake interviews.
The victim is incited into making payment for mandatory training
program, etc.
II. Preventive Vigilance/Learning Points –
 Do not make payments on unknown job portals.
 Genuine companies upon offering jobs never asks for money.
(13) Fake Advertisements for Extending Loan by Fraudsters
I. Modus Operandi –
 Fraudsters issue fake advertisements of personal loan offers (in
Instant messenger / SMS / social media) at very attractive low rates
of interest or with easy repayment options or without any security
requirement, etc., and ask the customers to contact them.
 Fraudsters also create fake website links to show up on search
engines which people search to find out about loans, etc.
 When customers contact the fraudsters, they ask for various upfront
charges like processing fee, GST, intercity charge, advance EMI, un-
hold charges, etc., and abscond without disbursing the loans.

24
II. Preventive Vigilance/Learning Points –
 Customer should be made aware that, processing fee if any is
deducted from the loan amount and bank never asks for an
advance fee before processing of the loan application.
 Customers should be advised to use Bank‟s/ FI‟s official website for
any financial requirements and not to share their details with
unknown people.
(14) Money Circulation/Ponzi/Multi-Level Marketing (MLM) Scheme Fraud
I. Modus Operandi –
 Many customers are lured to MLM / Chain Marketing / Pyramid
Structure schemes in exchange of promise of easy or quick money
upon enrolment / adding of members.
 But as the model is unstable, the fraudsters close the scheme and
disappear with the money invested by the people after a while.
II. Preventive Vigilance/Learning Points –
 Customer should be made aware about not being tempted by
promises of high returns offered by entities running Multi-Level
Marketing / Chain Marketing/Pyramid Structure Schemes, as same
is a unlawful activity.

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26
 PRECAUTIONS TO BE TAKEN FOR SECURING ONLINE
(E)
FINANCIAL TRANSACTIONS
(1) General Precautions
 Be wary of suspicious looking pop ups that appear during the
browsing session.
 Always check for a secure payment gateway (https:// - URL with a
Pad Lock Symbol) before making online payments.
 Keeping PIN (Personal Identification Number), password, and credit
or debit card number, CVV private.
 Avoid saving card details on websites/devices/public
laptop/desktops.
 Turning on two-factor authentication where facility is available.
 Never opening of emails from unknown sources containing
suspicious attachment or phishing links.
 Never sharing copies of Cheque book, KYC documents with
strangers.
(2) For Device/Computer Security
 Changing of passwords at regular intervals.
 Installing antivirus on the device and install updates whenever
available.
 Always scan unknown USB drives / devices before usage.
 Do not leave device/computer unlocked.
 Configuring auto lock of the device after specified time.
 Do not install unknown applications or software.
 Do not store passwords or confidential information on unknown
devices.
(3) For Safe Internet Browsing
 Avoid visiting unsecured websites.
 Avoid using unknown browsers.
 Avoid saving passwords on public devices.
 Avoid entering secure credentials on unknown websites.
 Never sharing of private information to unknown persons on social
media.
 Always verify security of the page, in case an email or SMS link is
redirected.

27
(4) For Safe Internet Banking
 Always use virtual keyboard on public devices since the keystrokes
can also be captured through compromised devices, keyboard, key
loggers etc.
 Log out of the internet banking session immediately after usage.
 Update passwords on periodic basis.
 Do not use same passwords for email and internet banking.
 Avoid using public terminals (viz. cyber café, etc.) for financial
transactions.
(5) For E-mail Account Security
 Never click emails from unknown addresses.
 Avoid using emails on public or free networks.
 Do not store secure credentials / bank passwords, etc., in emails.
(6) For Password Security
 Using a combination of alphanumeric and special characters the
password.
 Keeping two factor authentications for all the accounts if facility is
available.
 Change passwords periodically.
(7) Precaution to be taken by depositors
 The depositor must insist on a proper receipt for every amount of
deposit placed with the Bank/FI.
 The receipt should be duly signed by an officer authorized by the
Bank/FI and should state the date of the deposit, the name of the
depositor, the amount in words and figures, rate of interest payable,
maturity date and amount.
 The depositor must remain very careful while dealing with NBFC‟s
as Deposit Insurance facility is not available to depositors of NBFCs.

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29
 FRAMEWORK FOR CENTRAL PAYMENTS FRAUD
(F)
INFORMATION REGISTRY (CPFIR)

 RBI vide their letter No. DPSS.CO.OD No. 1622/06.08.005/2019-20 dt. February
24, 2020 has advised that a Central Payments Fraud Information Registry
(CPFIR) has been institutionalized to be effective from March 23, 2020 to track
the frauds undertaken using payment systems and put in place mechanisms to
prevent such frauds.
 The payment fraud reporting is applicable to all RBI authorised payment
system operators (PSOs) i.e. Banks / providers and payment system
participants operating in India. This includes banks, non-bank PSOs such as
Pre-Paid Payment Instrument (PPI) Issuers, Cross-Border Money Transfer (in-
bound) operators, Trade Receivables Discounting System (TReDS) entities, etc.
 All payment related frauds irrespective of value, either reported by the
customer to the Issuer Banks or detected by the bank, are to be reported to
FRM Cell, Risk Management Department with a copy to the respective Zonal
Offices.
 The Zonal Office upon receipt of such incident will immediately confirm the
fraud incident to us. FRM Cell, Risk Management Department, Head Office will
report the fraud details at RBI‟s Electronic Data Submission Portal (EDSP).
 The primary responsibility to submit the reported fraudulent transactions
would be of the respective branch whose issued payment instrument (ATM,
UPI, Cheque, etc.) has been defrauded. Zonal Offices will be responsible to
confirm the incident on the same day to FRM Cell.
 The payment frauds data are to be validated by respective Branches and to be
confirmed by Zonal Office regarding their authenticity and completeness,
prior to submission at FRM Cell.
 All the attempted Frauds either detected by the Bank or reported by the
customer are also to be sent to FRM Cell.
 Branches are advised to report the payment frauds data within 3 calendar
days (which may be reduced to real time by RBI) from date of reporting by the
customer or detection of fraud, in the RBI prescribed format which has been
shared with all the branch/offices on 03/08/2021 by email.
Important Reference :
 HO/RM (FRMC)/160/2021-22 dt 03/08/2021 “Framework for Central Payments
Fraud Information Registry (CPFIR)”
 CHO/RM(FRMC)/07/2019-20 dt. 25/02/2020 “Framework for Central Payments
Fraud Information Registry (CPFIR)”

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31
(G) WHAT TO DO UPON DETECTION OF A FRAUD ??
 Role of Branches :
 Immediately passing on the information to the concerned Zonal Office.
 All payment related Frauds/attempted frauds are to be reported in real time
basis to FRMC Cell keeping Zonal Offices in loop. The format of such reporting
has been emailed to all branches on 03/08/2021. (Ref : Chapter on CPFIR)
 Role Zonal Office :
Frauds less than 1 Crore Frauds more than 1 Crore
 After receipt of information of  Immediately on receipt of
fraud, Zonal Heads will have information of fraud of Rs. 1.00
arrange for the investigation of crore and above. Zonal Manager
the cases of fraud to arrive at the will ascertain the element of fraud
exact modus operandi, the on the basis of preliminary
amount involved and the investigation.
accountability aspect (staff
and/or outsiders).
 Zonal Heads must report the incident of fraud (in FMR-1 format
incorporating all required information) to Fraud Risk Management Cell
(FRMC) under Risk Management Department, Head Office within 7
(seven) days from the date of detection of fraud.

 CPFIR Cases : Any payment related frauds will immediately confirm the fraud
incident to FRMC. FRMC will report the fraud details to RBI in Electronic Data
Submission Portal (EDSP) format as per prescribed timeline.

 Further to above, Zonal heads are advised :

 To lodge compliant with the appropriate authority of ABI/Police depending
upon the amount involved in the frauds.
 To raise Staff Accountability Report and initiate suitable departmental action
against the staff members found accountable as per bank‟s extant guidelines.
 To take all possible steps to recover the money defrauded.
 To plug the lacunae in the working of the branches/offices to prevent
reoccurrence of frauds.

32
  Role of Head Office, FRMC Cell

Frauds less than 1 Crore Frauds more than 1 Crore

 FMR-1 shall be placed before  A comprehensive note on the

the Committee of Executives on perpetrated fraud along with FMR-1
Fraud Risk Reporting & shall be placed before the
Management. The Committee Committee of Executives on Fraud
will be the competent authority Risk Reporting & Management. For
to declare the fraud involving their observation/views.
amount of below Rs.1.00 crore.  Thereafter a note will be placed
before MD & CEO (in his absence
ED) for their decision to declare the
account as fraud.

 After classification of the incident as Fraud, FRMC Cell reports the same to RBI
within 21 days of detection in XBRL format.
 In compliance with RBI guidelines, two groups i.e., Risk Management Group
and Fraud Monitoring Group have been formed for prevention and early
detection of frauds exceeding Rs. 50.00 Crores.
 Cases of attempted frauds over Rs. 1 Crore are placed before ACB of the
board.
 Foreign branch will report the cases of fraud to the local police / investigating
agencies for investigation. In addition to this, cases will also be reported to the
Regulators, wherever required.
Important Reference :
 CHO/RM(FRMC)/05/2020-21 Date: 01.06,2020 “Fraud Risk Management Policy
for the Year 2020–21”

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 (H) DO’S AND DON’TS – AS A BANKER
Do’s
General Matters
 „Know Your Customer‟. Establish identity and address of the customer through
verification of photographs, signatures and photo copies of supportive papers
invariably.
 Identify/locate sensitive areas vulnerable to corrupt practices.
 Submit control forms invariably with details regarding deviations and irregular
features, if any.
 Analyse unusual fluctuation/sudden spurt in the advances/deposits.
 Carefully examine the nature of complaints.
 Study the Audit reports, particularly relating to systems and procedures and
initiate corrective steps.
 Ensure that CCTV has been installed at the branch, covers all vital areas,
especially SWO cabins, cash sorting areas and the area between the Strong
room/Safe to the Cash Section.
 Ensure that no unauthorised person enters into the areas meant for internal
use of the branch.
 Ensure that only authorized Officials open the Drop Box and account for all
the instruments.
 Ensure that the “Whistle Blower Policy” is known to all employees so that
instances of unethical behaviour, actual or suspected, fraud or violation of the
Bank‟s code of conduct can be reported to the Management.
 Ensure job rotation at stipulated intervals.
 Watch the lifestyle of staff and see if they are living beyond their means.
 Periodically scrutinize transactions in staff accounts as stipulated.
Cash
 Maintain the Key Register with a record of movement of all important keys.
 Ensure proper custody of cash keys by the Joint Custodians. Entry into the
strong room should be restricted to authorised persons.
 Physical verification of cash to be invariably undertaken each day after the
close of business hours. Ensure surprise cash verification at least once in a
month.
System Related
 Ensure staff to maintain utmost secrecy of password and also to change the
same regularly.

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  Ensure to log out from CBS when leaving desk.
 Ensure that day-end reports such as exceptional report, supplementary report
are checked on daily basis.
 User Ids of staff members transferred, retired or on long leave to be disabled.
Deposits
 Do send letter of thanks to new account holders and keep a close watch on
return of letter of thanks/ATM Cards/Notices sent.
 Do keep Account Opening Forms and other related documents under lock
and key.
 Record change of address/ mobile number only after observing KYC
compliance.
 Do monitor high value transactions in newly opened accounts.
 Do exercise caution while allowing operation in dormant/ inoperative
accounts.
 Ensure that withdrawal slips in SB accounts are always accompanied with
passbooks.
 Exercise extra caution when processing requests for duplicate pass
books/duplicate TD Receipts and entertain it only if the depositor makes the
request personally.
 Check MICR/ IFSC Code printed on the cheque for its correctness.
 Scrutinize quality of the printing/ paper of the instrument (cheque etc)/ colour
before making payment.
 Check all high value cheques using Ultra Violet Lamp before making payment.
 In case of high value cheques, account holder/ base branch to be contacted
for ascertaining authenticity of the cheque.
ATM
 Keep debit cards received from HO properly under dual custody.
 Ensure delivery of cards after ascertaining identity.
 Ensure security of the Admin Card and confidentiality of PIN.
 Ensure PIN is changed periodically and whenever there is a change in
incumbency.
 Ensure Admin Function is carried out using the Admin Card whenever cash is
replenished in ATM.
 Ensure that photocopy of the Admin Balance enquiry slips are pasted in a
register and are signed by both the joint custodians.

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Loans & Advances
 Be vigilant against common methods used by the fraudsters which include
 Submission of Fake Title deeds/documents of house property.
 Submission of fabricated income proof / IT returns.
 Creation of multiple title deeds for single property.
 Impersonation of seller in executing the title deed.
 Ensure pre-sanction visits to Project site and Borrowers‟/Guarantors‟
residence/ office to conduct discreet enquiry about their credentials and
antecedents and establishment of their identity beyond doubt and report on
such visit to be prepared on standard format.
 Proof of income and relative salary certificates are properly scrutinised /
verified from respective departments/ employer. Engage services of Chartered
Accountants to verify and establish genuineness of Income Tax Returns, in
case of doubt.
 Ensure that processing of loans and sanction thereof are done by different
officers.
 Ensure generation of Credit Report of applicant and guarantor from CIBIL/
CRIF.
 Pre-sanction inspection and pre-disbursement inspection should be done by
different officials.
 Ensure that loans are sanctioned by officials only as per their delegated
financial powers within the discretionary powers.
 Complete documentation and asset charge creation formalities prior to
disbursement of the facilities.
 Verify loan documents in respect of loans which have slipped into NPA within
a short period to detect any possible fraudulent submission of forged title
deeds/income documents etc.
 Carry out post disbursement supervision diligently.
 Avoid cash payment in loan accounts and ensure direct payment to supplier
concerned in accordance with work progress.
 Ensure that the assets have been actually created and record evidences.
 Ensure that ROC Registration is completed. Also ensure any change of
ownership and asset charge creation details in corporate accounts gets
reflected in the ROC/MCA website.
 Non Encumbrance Certificates as well as Certified copies of title deeds to be
obtained through empanelled advocates and it should be compared with the
original title deed deposited by the borrowers.

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 Stock statements are to be obtained periodically as per sanctioned terms,
verified and entered in DP register.
 Stock inspection to be carried out regularly by different staff member by
rotation.
 NSCs/KVPs/LIC Policy to be sent to Post Offices/ LIC through Bank‟s Official
prior to sanction of loan.
 Check the status of the accounts of company maintained with other lenders as
per specified format for exchange of information among banks.
 Ensure that the terms of sanction of a loan are complied with before
disbursement.
 Verify the end use of funds disbursed so that the diversion may be averted.
 Verify the source of income on the basis of supporting documents such as
bank statements, salary slip, sale register, invoices, income tax challans etc.
 Undertake visit of site prior to sanction to ascertain the valuation and
ownership of the property.
 Verify the authenticity of Chartered Accountant Firms who has certified the
financials.
 Verify title of land online which are available in certain states.
 Ensure execution of all the loan documents in branch in presence of bank
officials.
 Immediately after appraisal, keep gold loan packets in separate and distinct
sealed cloth packet/ pouch for each account in a Gold Safe under joint
custody of the Branch Manager and the Manager Cash.
 Take utmost care while dealing with third party entities such as gold loan
appraiser and ensure that they are not utilised in our domain.
 Verify the gold loan packets periodically.
 Certificate submitted by CA to be examined.
 If the borrowing company is maintaining any current account with other banks
without our permission, matter should be taken up with that bank for closure
of such account.
 The Audited Balance Sheet and other financial statements of the companies
submitted to the Bank are to be checked with that submitted with Registrar of
Companies and other statutory bodies.
 Any deviation in the sanction terms of the loan should be ratified by the
sanctioning authority.
 Disbursement is to be made after creation of proper mortgage over the
property and recording of Bank‟s charge on land with the revenue authorities

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 viz; Tahsildar/ sub-registrar‟s office. Necessary entries in CERSAI portal to be
made.
 MOTD (Memorandum of Title Deeds) registration to be ensured, wherever
state law permits.
 Branch Officials before sanction of any credit proposal check the names of
borrowers/ prospective borrowers, promoters/ guarantors from Central Fraud
Registry (CFR). ID & password for accessing the said registry is available with
Zonal Offices.
Don’ts
 Do not conduct yourself in a manner unbecoming of your status.
 Do not solicit, seek or accept any gift or valuables either from the constituents
of the Bank or from any one, more than what is permissible under the rules.
 Do not engage in any commercial proposition while being in the service of the
Bank.
 Do not make any attempt to short-circuit the prescribed procedure; for it may
give rise to suspicion against you and the attendant unpleasant consequences.
 Do not forget to report any irregularities/ deviations you come across to the
higher authorities, lest you be suspected to be party to it.
 Do not route the savings and funds of your relatives and others through your
account.
 Do not be under any obligation to anyone, particularly those with whom you
have official dealings.
 Do not indulge in any dishonest or improper act even in your private life, for it
would bring discredit to your service.
 Do not enter into any borrowing arrangement with any bank except with
prior permission of the competent authority.
 Do not make any false bills or make any attempt to falsify any record/
account; it may cost your career.
 Do not cultivate extra friendship with Bank‟s contractors, borrowers, suppliers
etc.
 Do not handle but pass on to your higher authorities files concerning matters
in which you and your relatives have interest, for your decision (if any) in such
matters might not be dispassionate or objective.
 Do not get influenced by personal prejudices while disposing of files.
 Do not relax while you are on invigilation or supervision duties.
 Do not show any favouritism or commit any irregularity in inviting tenders and
awarding contracts.

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  Do not fail to seek prior permission for acquisition or disposal of immovable
property of any amount above the prescribed limit.
 Do not delay disposal of complaints.
 Do not speculate in any stock, share or other such investments.
 Do not entertain any third person/ middlemen to canvass loans and complete
loan documents.

Remember Always !!!

 Being a public servant we are expected to act honestly and faithfully at all
times.
 Always demonstrate a sense of fair play and impartiality in disposing cases, it
is paying.
 Show courtesy and consideration in public dealings, it will knock out the basis
of public grievances.
 Maintain strictest secrecy regarding the Bank‟s affairs whatever be the
provocations: this is the least expected of you.
 Observe scrupulously the rules and regulations concerning your personal
conduct, it will not embarrass you any time.
 Attend to public grievances promptly; it improves the image of the institution.
 Dispose of cases promptly but without undue haste, it helps.
 Remember to date your signature always, it will avoid complications.
 Do intensive monitoring of delays and disposals of files, it helps curbing
corruption.
 Pay particular attention to the procedures and do not delegate them to the
subordinates, it is a good way of preventive vigilance.
 Keep on assessing the strength of the internal control. This is the surest way to
reduce malpractice.
 Get all oral instructions and decisions of the higher authorities down in writing
and get them confirmed – it is in your own interest.

EPILOGUE
 All field functionaries are advised to meticulously go through the cases of
frauds and their modus operandi along with the preventative
vigilance/learning points mentioned in this Hand Book.
 FRM Cell will continue dissemination of more Modus Operandi of frauds
perpetrated in banking arena in the subsequent versions of the “Handbook on
FRM” for information and compliance of all concerned.

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Notes

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Notes

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 Fraud Risk Management Team

For any suggestions, please feel free to contact FRMC

Email ID- [email protected]

Tel :- 033 4455 8082/8442

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