Bankers see technological advancements in banking as a potential threat to the system.

“While technology has brought about a sea change in the way we bank today compared to the 80s and early 90s, it is also posing a threat to bankers. Customers can transact from the comfort of their homes - over the Internet, enjoy mobile banking services, use the RTGS (Real Time Gross Settlement) /NEFT (National Electronic Funds Transfer) system for easy and quick transfer of funds, the ATM and so on, but banks have to keep a close watch on the various deliverables,” said the Branch Manager of an old private bank, preferring anonymity.

When asked how such advancements can pose a threat to banks, the bank’s auditor narrated an incident of how the RTGS facility was misused by a customer to siphon off funds.

“The RTGS can hoodwink banks,” he said and continued: “In this particular case, the customer used this route to divert funds.

“He was doing roaring business. So, banks naturally were after this customer. He took advantage of the situation and sought project finance. He requested the banks (a consortium of 15+ State-run banks and four private banks) to have the funds transferred to his current account instead of the escrow account.

“Bankers should not have relented, but they did. The customer took advantage of the banks weakness and started transferring amounts using the RTGS route for investment in immovable properties.

“Since the name of the beneficiary is not reflected in RTGS transfers, the banks were unaware of the diversion of funds from the account. All this came to limelight long after the misappropriation and the case is now before the CBI,” the official said, without divulging the sums misappropriated, the customer identity and the banks involved.

A customer, who had stepped into the branch for transferring money using the NEFT route, heard the officer patiently, before asking the banker “why blame technology, when you have given the slip? It is far more convenient and economical to transfer money using the NEFT route; it is less of a hassle compared to getting a draft and posting the same, notwithstanding the postal delay and the fear of it getting into wrong hands.”

(This article was published on April 22, 2014)
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