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narendra.s.p (Chief Manager(Law))     29 September 2013

Forensic audit

When does Bank conduct Forensic Audit? Who is qualified to conduct forensic Audit for Bank.


 4 Replies

binay (advocate)     04 October 2013

only AG can do it through any alloted officer.

RAJU O.F., (Advocate)     05 October 2013

Can you clarify as to what is forensic audit in a bank?  When the signature in documents of borrowers are disputed courts used to send it to forensic examination. Forensic audit in a bank is new to me, even though I had spent 32 years in banks.

narendra.s.p (Chief Manager(Law))     06 October 2013

RBI Circular:

RBI/2009-10/159 DBS. CO. FrMC. BC. No. 7 /23.04.001/2009-10 dated 16/09/2009

 Paragraph 6:

Fraud investigation requires competence in 'forensic audit' and also technical / transactional expertise. In this regard, banks may take immediate steps to

identify staff with proper aptitude and provide necessary training to them in forensic audit so that only such skilled staff are deployed for investigation of

large value frauds.

The skills range from expertise in analysis of transaction through audit trail to competence in "forensic audit" supported by specialization in IT based data abstraction, data filtering and data sanitization. In view of the increasing incidence of frauds in banks, it is necessary that the banks set up dedicated and well organized "Special Surveillance and Investigation Function", which would, on continuous basis, exercise surveillance over potentially fraud prone areas and investigate into large value frauds with the help of skilled manpower for internal punitive action against the staff and external legal prosecution of the fraudsters and their abettors. 

RAJU O.F., (Advocate)     08 October 2013

Thanks to Mr.Narendra for furnishing the information. It is a fact that most of the fraud in banks happen with the help of bank staff at all levels joining with the borrowers. Hence wide publicity must be given by the banks at higher level in the media that the said 'forensic audit' is being conducted in necessary cases doubtful of fraud. I know one case, of a nationalised bank, wherein the Manager granted 15 loans of Rs.15 lakhs each to one party in the name of fictitious companies and on  non-repayment, bank filed suit in DRT combining dues in all the accounts; but DRT dismissed the suit, since bank could not produce proper documents for availing the said loans and summons sent were all returned unserved noting ' no such company/persons'. I(n effect public money went for the pleasure of the borrower and the bank officials.

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