Context

The Reserve Bank of India (RBI) is in the process of putting together an exclusive wing for banking fraud oversight, which will have teams for meta-data processing and analysis, artificial intelligence analysis units, as well as pro-active risk assessment cell.

About

• Bank fraud can be defined as an unethical and/or criminal act by an individual or organization to illegally attempt to possess or receive money from a bank or financial institution.
• In Contractual term as described in the Indian Contract Act, Sec 17 suggests that a fraud means and includes any of the acts by a party to a contract or with his connivance or by his agents with the intention to deceive another party or his agent or to induce him to enter in to a contract.
• Banking Frauds constitute a considerable percentage of white-collar offences being probed by the police.
• Unlike ordinary thefts and robberies, the amount misappropriated in these crimes runs into lakhs and crores of rupees.
• Bank fraud is a federal crime in many countries, defined as planning to obtain property or money from any federally insured financial institution. It is sometimes considered a white collar crime.

Background:

• The idea of a fraud oversight wing was floated in October 2019 by the top management of RBI.
• The working conditions, however, were very strict and anyone opting for that cadre would not be allowed to leave for three years.
• To overcome the problem, the RBI sought to create an entire new wing and hire fresh people, including industry veterans who would lead the teams.
• These new teams will also be given training in the latest technologies, so that they can also prevent another Yes Bank kind of event.
  
  
  

  Conclusion:

  The banking regulator is also planning to bring in experts from the private sector working in all these domains to train the new members in the fraud oversight wing. These training sessions are will be repeated every year in the initial years.