RBI Warns Indian CFOs Against Fraudulent Transactions
Swaminathan J says that there is a need for long-term solutions that address the root causes of the problem
The Reserve Bank of India (RBI) has cautioned Chief Financial Officers (CFOs) against the evergreening of loans and fraudulent transactions through certain bank accounts with large corpus amounts without valid reasons.
Addressing CFOs at the Conference of Statutory Auditors and Chief Financial Officers of Commercial Banks and All India Financial Institutions in Mumbai, RBI Deputy Governor Swaminathan J said, "We found certain banks having lakhs of such accounts with apparently no valid reason. Some of these accounts were also used as a conduit for certain fraudulent transactions and the ever-greening of loan accounts."
Emphasising the importance of integrity and fairness in financial reporting, Swaminathan J stated, "The CFOs must protect the integrity of the financial reporting by guarding against any misadventure or intelligent interpretation of regulations or accounting standards. I would urge the CFOs to have an eye for detail and honest and transparent communication with the MD & CEO and the rest of the top management. You should also stay alive the channel of escalation to the Chair of the Audit Committee of the Board (ACB), if a higher level of guidance is needed in any matter."
The RBI Deputy Governor expressed concerns over fraudulent transactions and stressed the need for long-term solutions that address the root causes of the problem. "Rather than implementing short-term fixes, understanding and addressing the underlying causes of these issues ensures that compliance is sustained over the long term."
In his concluding remarks, Swaminathan emphasized the importance of collaboration between stakeholders in the banking financial system. "All of us—auditors, CFOs, and supervisors—should continue fostering collaboration and communication so that we move towards a future where our banking sector not only meets but exceeds expectations, setting new standards of excellence in governance and integrity."
