1.

While the primary responsibility for preventing frauds lies with banks themselves, the
Reserve Bank of India (RBI) has been advising banks from time to time about the major fraud
prone areas and the safeguards necessary for prevention of frauds.

2.  The Reserve Bank has also been circulating to banks, the details of frauds of an ingenious
nature, not reported earlier so that banks could introduce necessary safeguards / preventive
measures by way of appropriate procedures and internal checks.

3. Banks are also being advised about the details of unscrupulous borrowers and related
parties who have perpetrated frauds on banks so that banks could exercise caution while
dealing with them. To facilitate this ongoing process, it is essential that banks report to RBI
complete information about frauds and the follow-up action taken thereon. Banks may,
therefore, adopt the reporting system for frauds.

4. Therefore, we can conclude that frauds are inevitable in totality, but strict actions to an
extent possible have been taken by RBI to prevent, detect & possibly correct frauds.