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RBI may directly probe large bank frauds

The Reserve Bank of India is learnt to have decided to undertake investigations into large bank frauds. The central bank is concerned about the failure of such investigations undertaken by the banks themselves, as in the cases of Deccan Chronicle and Kingfisher Airlines. RBI’s Board of Financial Supervision has cleared a proposal that RBI itself will conduct independent forensic audits of corporates declared fraudulent by banks. Such audits, however, will be restricted to corporates that have borrowed more than Rs 1,000 crore. RBI will in the first instance investigate into the dealings involving Deccan Chronicle and it will be assisted in this by audit firm PwC. The steep rise in bad loans in the past few years has forced RBI to come up with strong measures to ensure banks do not hide bad loans

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