Union Finance Minister Nirmala Sitharaman has asked public sector banks to tighten their vigilance against frauds and wilful defaults. In a meeting chaired by Sitharaman on Saturday in New Delhi, the Finance Minister asked banks to monitor the early warning signals to check potential frauds and advised them to put more effort into recovery from accounts declared as fraud and wilful default. Banks were directed to make efforts for timely identification of accounts as fraud and their subsequent investigation.
Finance Minister asked banks to concentrate on fraud prevention activities on both large corporate frauds and wilful defaults as well as on actions that defraud individual customers. The FM instructed the banks to adopt advanced fraud prevention and detection mechanisms and ensure that the customers are further educated about safe banking practices. Recognising that the effectiveness of legal action against defaulters before courts and tribunals largely depends on effective representation by lawyers and attorneys assisted by bank officials, the Finance Minister also called for a performance review of counsels representing public sector banks to ensure better legal outcomes.
FM: Focus on responsible lending practices
The minister urged the public sector banks (PSBs) to adopt responsible lending practices across the board. The minister instructed the PSBs to enhance due diligence before loan disbursement, ensure regular monitoring of large loan accounts, and undertake swift and thorough legal action in cases of such default. Sitharaman also exhorted the banks to take strict administrative action against the conniving officials of the banks who enable fraud and wilful defaults. FM: Implement stringent cyber security protocol; protect customer privacy
Issues related to cyber security were also deliberated in the meeting. The Finance Minister noted the need to adopt proactive cybersecurity measures and implement stringent security protocols to protect sensitive financial information and systems from cyber-attacks. In this regard, the preparedness of all the PSBs in addressing cyber security risks was reviewed by the Union Finance Minister. Banks have also been directed to ensure complete privacy of customer data.
FM: NARCL should expedite on boarding of stressed assets
The progress on the acquisition of accounts by the National Asset Reconstruction Company Ltd (NARCL) was also deliberated. Sitharaman directed that the acquisition of stressed accounts by NARCL needs to improve further, and necessary efforts must be made in this direction. It was advised that NARCL and banks should hold regular meetings to expedite the on-boarding of stressed accounts.
FM: Offer attractive deposit schemes
In addition, the Finance Minister emphasised the importance of mobilising deposits, urging public sector banks to innovate and offer attractive deposit schemes to enhance their deposit base, which will also enable them to extend more credit.
(Edited by : Keshav Singh Chundawat)
