RBI sets up committee to check on NPA divergences and SWIFT-like frauds

Amid risks arising from the potential malicious use of the SWIFT infrastructure, it had "alerted at least on three occasions since August 2016, confidentially cautioned and alerted banks of such possible misuse advising them to implement the safeguards detailed in the RBI’s communications, for pre-empting such occurrences".

"Banks have, however, been at varying levels in implementation of such measures," RBI pointed out.

Since the last few quarters, most banks including top ones like State Bank of India, have had to make disclosures of its large divergences that occurred while classification of their NPAs (non-performing assets) in comparison to RBI's assessment.

The committee will look into the reasons for high divergence observed in asset classification and provisioning by banks vis-à-vis the RBI’s supervisory assessment and the steps needed to prevent it.

It will also check the "factors leading to an increasing incidence of frauds in banks and the measures (including IT interventions) needed to curb and prevent it; and the role and effectiveness of various types of audits conducted in banks in mitigating the incidence of such divergence and frauds," RBI said.

The central bank said that as a part of its ongoing efforts to strengthen the supervisory framework in the country, it has been issuing necessary instructions to banks from time to time on a variety of issues of prudential supervisory concern, including the management of operational risks inherent in the functioning of banks.

The members of the expert committee will be: Bharat Doshi, Member, Central Board of Directors, RBI; S Raman, former Chairman and Managing Director, Canara Bank and former Whole-Time Member, SEBI; and Nandkumar Saravade, Chief Executive Officer, Reserve Bank Information Technology Pvt Ltd (ReBIT) and A K Misra, Executive Director, RBI will be the Member-Secretary of the committee.