CII Calls for Better Supervision, Monitoring to  Prevent Bank Frauds | CORPORATE ETHOS

CII Calls for Better Supervision, Monitoring to  Prevent Bank Frauds

By: | February 26, 2018
CII
Feb 26: The Confederation of Indian Industry (CII) has called for a twin strategy for tackling financial frauds, including better monitoring and supervision of banks and spread of best corporate governance standards.
“Government, regulators and industry must act fast to address systemic risks in the financial sector. The three key solutions for the banking sector are better management and operational efficiencies, use of technology such as blockchain and big data analytics, and lowering Government shareholding in public sector banks,” stated Ms Shobana Kamineni, President, CII. She went on to add that “Such financial malfeasance perpetrated by a collusion of unethical business entities and corrupt officials should not lead to a situation where funds to industry get choked.”

The CII press statement noted that technology advance could be a major enabler for ensuring monitoring of transactions that are subject to financial fraud and risks. Some banks are already deploying artificial intelligence, big data and blockchain technologies to better regulate their operations. It is important to minimize human interface in such transactions to lower the risk of misdemeanors, added CII.

“It is time for the Government to consider consolidation of PSBs and develop a few strong banks adhering to best standards in governance, accountability and transparency. The regulator must institute supervision systems aligned with the changing dimensions of banking and technology to deter misconduct by individual players,” said Ms Kamineni.

CII stressed that bringing down Government stakes in public sector banks is unavoidable for building expert management practices and greater accountability. Currently, shareholdings of Government have been rising with bank recapitalization attempts, and these should be brought down to 52% at the earliest as intended by the Government. A roadmap could be announced for bringing Government stake to 33% in three to four years, suggested CII.

The industry sector too needs to strengthen internal systems of enterprises and adhere in letter and spirit to regulatory norms, added CII. Strict business processes, accountability, anti-bribery and anti-corruption mechanisms and risk management are some of the areas for companies to strengthen.

This is all the more important as India is moving towards ‘ease of doing business’ involving self-regulation and self-certifications. The actions of a few fraudulent actors need not translate into more stringent regulatory norms for the entire industry sector when corporate governance structures are strictly followed, emphasized CII.

Better corporate governance is an ongoing endeavor of CII which is working continuously with enterprises on internalizing organization-wide management ethics and values