The Reserve Bank of India has cautioned banks about the increasing number of frauds that were perpetrated by the use of forged documents that had been certified by professionals – that is, valuers, advocates and chartered accountants. In a circular to all bank CEOs last week, the RBI said that in a study of large frauds, it has noticed these things happened even in branches that were subject to concurrent audit. It said that in many instances, audit responsibility was assigned to bank staff without adequate training
It has asked concurrent auditors to look into the genuineness of documents of title and has asked them to check with local revenue authorities where necessary. It has also asked banks to independently authenticate the genuineness of the certificate issued by any authority that is submitted by the borrower.
Where it is established that such certification is wrong, the Indian Banks Association (IBA) should put in place a process to issue a ‘caution list' about the certifier to all banks, the circular said.
HOME LOANS
Asked about the extent of the problem, Mr Rohit Mahajan, Executive Director & National Head - Forensic Services, KPMG India, says, “Our experience working with banks involving home loans portfolio has indicated several issues such as inconsistent documentation, double financing, inflated valuation and others.”
He adds that the aspects typically forged in loans segment include credit history of individuals so as to be able to obtain more loan and overvaluation above the market values to avail higher loan amount.
Besides, there are also builder induced frauds where individuals in connivance with builders forge property documents (especially in case of buildings under construction) to avail loans. The builder sells the same property to multiple buyers. All forged documents are typically used to avail multiple loans from various banks or to increase loan amounts from a bank, according to him.
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