RBI has released Preventive Measures for Cheque related Fraud Cases

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. Banks 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 banks 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 bank or it’s risk appetite.

2. In addi­tion to the above, banks 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, banks 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.

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