After the Reserve Bank of India (RBI) barred banks from issuing guarantees in the form of letters of undertaking (LoU) to prevent any further misuse of the facility that led to the PNB-Nirav Modi fraud, bankers on Thursday collectively decided to put in place more rigorous and secure risk management mechanism. They have decided that within six months a more robust mechanism will be framed.
At a three-day workshop organised by public sector banks on risk management, an action plan was drawn up to further strengthen controls in the areas of trade finance, SWIFT, credit risk, operational risk besides cyber and IT risk. Banks will now place these action plans with timelines for implementation and improvement before the respective boards.
“All the chief risk officers, executive directors and chief technology officers of the public sector banks came together to review what are the best practices from risk management and also compiled a list of best practices so that individual banks can go back and review where there is room for improvement,” Mr M S Sastry, deputy managing director of SBI, said.
According to Mr Sastry, banks are in the process of establishing Onsite Cyber Security Operation Centre (C-SOC) wherever not in place to monitor all IT assets. Banks are committed to provide Enhanced Access and Service Excellence (EASE) to all customers in a safe and secure environment, he added.
Terming it as a one-off incident among 5,000 branches dealing in foreign exchange in the entire banking system in India, Mr Sastry said: “Each bank has already scanned its LoUs and Letter of Credit-related transactions and has confirmed during the workshop that all of them are properly assessed, genuine and accounted for except those already reported.”
According to experts, most PSU banks have been hardly recruiting fresh staff and hence their operations have been under tremendous pressure. They lack adequate trained and qualified personnel to undertake credit risk appraisal, loan monitoring and follow-up with customers.
SBI clarification: The country’s largest public sector lender, State Bank of India (SBI), on Thursday clarified that it has not closed 41.16 lakh bank accounts ‘suomotu’.
The bank said there are a total of 41 crore savings bank accounts opened with SBI at this moment out of which 2.10 crore bank accounts were opened during the current financial year.
The bank said of these, 1.10 crore accounts are PMJDY accounts which are exempt from average monthly balance requirement.
On account of the merger of SBI’s associate banks with SBI in April 2017, where the customers were having multiple accounts with different Associate Banks and SBI, the number of accounts closed during the year is relatively high.
SBI added that those who are not able to maintain average monthly balance can convert their Regular Savings Bank accounts to basic saving account, free of charge.