The Reserve Bank of India has raised concerns over the misuse of internal accounts in some of the banks. Inspections were carried out revealing that a few internal accounts used by a bank for its operations are being used for carrying out fraud. The central bank of the country has warned the banks about the misuse.
As per RBI Deputy Governor, Swaminathan J, the RBI’s investigations have revealed there are many internal bank accounts without any valid reason. Some accounts are being used as a conduit for fraud and the evergreening of loans. Now, it has warned banks about the misuse.
The inspection further revealed that some banks opened lakhs of internal accounts with no valid reason. Now, it has taken a step against the misuse by asking the Chief Financial Officers (CFO) of these banks in question, to close all these unnecessary bank accounts. Not just that, the central bank has also asked the banks to just keep and manage the necessary accounts. It further urged banks to keep better control of these accounts. Additionally, the respective banks have to check the accounts regularly and give the audit report to the committee.
The Reserve Bank of India’s Deputy Governor warned the banks and stated that in the last few years, special attention has been given to the control and management of the internal account. During such investigation, it was found that some banks have internal accounts in lakhs and “there is no clear reason for their existence.” He further called such accounts to be risky as it could lead to the possibility of misuse.
Apart from this, the RBI has also warned the banks as well as the non-banking financial companies (NBFCs) to keep a close eye on internal accounts. The main reason why RBI has raised concerns over this is because it suspects that these fake accounts of the banks are being used for various digital frauds.
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