State owned Canara Bank in an inter-office memorandum has cautioned branches of frauds in the name of bulk deposits of government organisations.

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As per the report, the bank has noticed two frauds incidences that took place in bulk deposits of government organisations with the amount involving Rs 47 crore and Rs 100 crore.

The incident came to light when another group of people approached to arrange another bulk deposit of Rs 250 crore with similar request for opening of fixed deposits and current account.

After the fraud, the bank has released a 'Fraud Educative Series', where it has mentioned the modus operandi, loopholes in the banking system and in future how frauds can be prevented.

Further, the bank has asked every branches to ensure that the deposit is made for the same amount and period requested. Also, branches should be advised to avoid middlemen for securing deposit.

Modus Operandi of Fixed Deposit Fraud

A branch gets a lead for canvassing a bulk deposit of Rs 100 crore from a government organisation. After confirming the interest rate for one year and one day, an amount of Rs 100 crore is transferred from another bank. Immediately after receipt of the amount, branch receives a letter from the organisation to keep Rs 50 crore in fixed deposit and transfer Rs 50 crore in a newly opened current account.

Required documents for opening the current account is also submitted. From the current account, Rs 47 crore is transferred to various accounts within a short span of ten days. Subsequently, it cames to light that the current account was opened by submitting fabricated documents and the amount was siphoned off by fraudsters.

Loopholes in Banking System

The original instruction is to keep the entire amount in fixed deposit for one year one day. It's possible the branch fails to ensure the genuineness of the subsequent communications received to open a current account and transfer funds to the account. The branch has not checked up with the department while money was getting transferred with many cheques.

How Fraud Can Be Prevented

Canara Bank told its branches they have to be cautious while handling government deposits. "Don’t entertain any middlemen. Documents/ communications sent through any messengers should not be relied upon. The branch should directly deal with the official in charge of the department," the communication said.

First Published:Jun 13, 2020 3:31 PM IST