The Rs 12,700 crore Punjab National Bank scam where loans were credited in a fraudulent manner had the involvement of bank employees
A Delhi-based background verification company has received multiple requests in the past two months from several private sector banks, to go deeper into the background verification of the new joinees that they hired from business schools. The interesting part here, as the vice president mentioned, is that they also want to check deeper into any past criminal records of the recruits apart from the other checks.
“Since India does not have a single system to check on criminal record, we had to take help from secondary agencies as well as local police authorities to get the information. Despite this taking much more time, the banks were ready to wait,” he added. The official, however, said that public sector banks still do very basic checks.
Following the Rs 12,700 crore fraud at Punjab National Bank (PNB) wherein fraudulent Letters of Undertaking (LOUs) were issued to diamond merchant Nirav Modi and his kin, the banking sector is getting cautious. This case gained prominence especially because bank officials were allegedly involved in the scam.
While bank officials refused to comment on record on this matter citing sensitivity of the issue, senior human resource officials that Moneycontrol spoke to, said more than one agency is being given the contract to check on the past track record of those being recruited. This is despite the fact that the costs incurred go up by almost 30-40 percent
Anshul Prakash, Partner, Khaitan & Co said that such background verification check is imperative as it could help in maintaining integrity in an organisation and protecting confidential information. He added that this also could help mitigate any legal issues related to potential employee exit due to negligent hiring, reducing workplace crimes such as theft, harassment and embezzlement.
Credit scores are also a must in most cases. This would give the employers data about how disciplined a candidate is in terms paying dues. This is crucial information especially in the banking sector since these prospective employees would handle large amount of cash on a daily basis. A score of 750 and above is considered positive while those with lower scores would also be questioned.
It is also slowly spreading to other sectors as well. Hrushikesh Mehta, Head-Direct to Consumer Interactive, TransUnion CIBIL said that in light of recent events in the banking sector, employers across industries are more cautious than ever before. He added that credit checks can be used to understand a candidate’s or employee’s financial position, credit activities, and repayment history, but can also underline financial stress.
According to a report by background screening firm AuthBridge, the resume discrepancy rate at 23.99 percent is the highest in financial services sector amongst all industries. It said that the discrepancy rate in this sector has seen a substantial increase, majorly due to limited job opportunities.Unlike industry bodies like NASSCOM which has the National Skills Registry, a centralised database of all IT services and BPO sector employees in India, banking industry has no such data to fall back on. Due to this, they are required to put in more resources to verify new employee credentials.