Graph of Cheque-related frauds on the rise; RBI directs banks to take additional preventive measures

MUMBAI : IT is common knowledge that the graph of cheque-related fraud cases has never experienced a downward journey. As per the RBI, 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 have, therefore, been 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.

Some of the preventive measures which can be adopted and as suggested by RBI are as follows:

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 RBI states that 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.

Banks may also consider the following preventive measures for dealing with suspicious or large value cheques:

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.

As per RBI, 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.