RBI sets up fraud monitoring cell

BENGALURU: Lauding the efforts taken by the government to take action against wilful defaulters, RBI Governor Raghuram Rajan today said the central bank has created a monitoring cell for early reporting of frauds to investigative agencies.

"We should send the message that no one can get away, and I am glad that the Prime Minister's Office is pushing prosecution of large frauds. The RBI has set up a fraud monitoring cell to coordinate the early reporting of fraud cases to the investigative agencies," Rajan said addressing an event here.

He further said quick and effective investigation by the agencies is very important to check frauds.

Rajan, who has decided to hang up his boots and return to the academia, said the sight of a banker sitting along side an investigative agency will send a strong message to the borrower and make him cough-up the money owed.

"Those who have diverted money out of their companies, especially into highly visible assets abroad, a stern message sent by bankers sitting together with investigative agencies should help send the message that the alternatives to repayment can be harsh."

Interestingly, the comments were made in the city that used to house the headquarters of Vijay Mallya-owned companies before the liquor baron moved to the UK earlier this year.

Rajan said RBI has given a lot of flexibility to banks to deal with genuine cases of loan losses with measures like 5/25 scheme of rescheduling loans,but warned about its misuse.

"It's extremely important that banks don't use the new flexible schemes for promoters who habitually misuse the system or for fraudsters," he said.