Banks must remain on vigil constantly in order to avoid being victims of fraudsters, who ‘always try to remain ‘one step ahead of the bankers, regulators and the police’. Stating that frauds cannot be wished away, he said banks can only be consciously on their vigil to ward off frauds and initiate exemplary action on the perpetrators of frauds which will serve as deterrents to intending fraudsters, Gandhi at a meeting on financial frauds. The endeavour has to be to prevent the fraud, detect it at the earliest if it happens and minimize its negative fallout, he said, deprecating the usual systemic response by banks and the bankers, which typically include withdrawal from lending, becoming risk averse, excessive collateralisation and even efforts to recoup the losses through higher interest rates and charges. When it comes to fraud risk management, a bank has to be like a referee in a football game, always moving with the players and be alive to changes in the game and take action, he said at the event organized by Assocham. He advised the banks to do pattern recognition and conduct discreet probes while they also need to invest in data analytics and intelligence gathering to make fraud detection as near to real time as possible.
