I draw the attention of Reserve Bank of India to my observation in one of the major Banks in India where two debits (part of several unauthorized debits that occurred in the account) reflect in the customer’s account at the branch but does not reflect in the records of the Internet Banking department extracted from perhaps the core banking server.

What does this reflect?

1. An amount of money has been debited to a customer and it has just vanished.

2. It appears that the traditional double entry book keeping in the Bank where every debit must have a corresponding credit does not work in the internet banking system.

3. How can the accounts of the bank be considered reliable?

4. Has any body done a software code audit in this Bank?

5. Is there a software related fraud to siphon off money from the customers?

6. What is the role of RBI in such a scenario?

7. Has the Bank reported this discrepancy to RBI?

8. Has the Bank conducted an internal enquiry?

9. Who should be held accountable for such issues?

10. Is there a need for a software audit to be conducted on all Banks so that the hard earned funds of Indians are safe in the bank?

Last but not the least, is it only one such transaction in the Bank or are there many others in this Bank and in other Banks?

Are we sitting on a volcano of frauds that may burst any time and take the Indian bank down and along with it the Bank shares in the stock market and the economy?

A few years back I had brought to the notice of the public another software glitch in another major bank which was published even in the media. That was also an indication of an underlying problem in software according to which it appeared that the expenses debited on interest account did not tally with the interest credited to another account in the same transaction indicating possible leakage of income of an estimated several thousand crores.

However the bank gave some flimsy explanations and the issue was not further explored.

As an ex-Banker, I am aware of the adverse effect a news of this kind may have on the specific Bank and hence not discussed the name of the bank/s here. However, if a responsible officer of Reserve Bank of India contacts me officially, I will be able to share the information that would be necessary for them to take corrective action.

Recently I tried to get some responsible RBI officers to attend a seminar in Bangalore where the risks arising out of such negligence by Banks were discussed. However the desired functionaries could not attend the seminar. It is essential for RBI to keep its eyes and ears open to get such information from experts so that they can take pro active steps in safeguarding the interests of depositors.

I hope the indicative information in this article will make RBI or the Minsitry of Finance to take necessary action which the depositors of Banks would expect from the regulatory authorities.

 Naavi of Naavi.org

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