The finance ministry has asked public sector banks to tighten norms, including know your customer monitoring for high-value fixed deposits (FD), to check the kind of frauds suspected to have been committed at Dena Bank and Oriental Bank of Commerce (OBC).
The ministry would like banks to make a fool-proof arrangement for high-value FDs, including due diligence of KYC details, sources said.
According to the preliminary forensic audit report, a fraud to the tune of `436 crore in Dena Bank and OBC have been committed through multi-layer system. It is suspected that there was some money laundering also.
The lenders are also alleged to have indulged in siphoning off the money (`180 crore by OBC and `256 crore by Dena Bank) received as FDs.
Banks have been advised to categorise FDs that may fall under high value criteria, sources said. At the moment, different banks have varied definitions of high-value FDs.
Besides, the finance ministry has asked the Reserve Bank of India (RBI) to tighten lending norms, in the light of Kingfisher case, to prevent borrowers from opening multiple current accounts outside their consortium banks.
According to sources, Kingfisher Airlines allegedly diverted funds by opening a current account in HDFC Bank where it had a balance of `7.5 crore as on date. This fact was not known to the consortium of lenders, headed by State Bank of India, that have an outstanding debt of exposure `6,521 crore to the now-grounded carrier.
There is need to strengthen the monitoring mechanism as such diversion can be monitored by the central bank, sources said.
There has been a spate of defaults of which a small proportion were intentional while the rest being due the slowdown in the economy.
Recently, the finance ministry had ordered limited forensic audit into some non-performing accounts of Kolkata-based UCO Bank to find out whether there were any irregularities in sanctioning of loans.