Fraud-hit Citi toothcombs loan deals

Citibank, battered by the recent fraud in which an employee siphoned out Rs 300 crore by duping the bank’s customers into investing in fraudulent schemes, is now screening all its outstanding mid-to-big-ticket size loans. Mahua Venkatesh reports.

Citibank, battered by the recent fraud in which an employee siphoned out Rs 300 crore by duping the bank’s customers into investing in fraudulent schemes, is now screening all its outstanding mid-to-big-ticket size loans. The bank is also going through all its financial transactions with a fine toothcomb.

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The bank’s internal audit team is now screening existing loans, repayment patterns, and investments apart from other details to prevent similar fallout that had scarred the bank’s reputation in India, a bank source said.

Several other banks, including a few government-owned ones have also adopted a similar exercise to ensure that loans do not turn bad and customers aren’t taken for a ride through well-veiled schemes and attractive offers. The average time taken to sanction large-ticket loans have also gone up since December, with banks following a rigorous scrutiny process.

“Citibank has undertaken an exercise to go though all critical operational, audit and financial records to ensure that there are no suspicious dealings,” a senior executive at Citibank told HT on the condition of anonymity.

The official spokesperson of Citibank however did not respond to HT’s questions.

Several state owned banks have adopted the same strategy, said the CMD of a public sector bank . “Before sanctioning any loan, we are going through a stringent screening process.”