As per the procedure outlined by the apex bank, the complaint should be sent in a closed envelope to the Department of Banking Supervision.

Our Bureau

Mumbai, Jan 25

FOREIGN and private banks operating in the country now have more reason to be on their guard. Their employees can blow the whistle in case of irregularities such as corruption, misuse of office, fraud, or failure to comply with RBI rules.

In case of a genuine complaint, the Reserve Bank of India will crack down on the guilty but will not reveal the name of the complainant. However, anonymous complaints will not be entertained.

The RBI on Wednesday issued guidelines for the `Protected Disclosure Scheme' for private and foreign banks. The disclosure scheme is already in force in the case of public sector banks and the RBI itself.

These guidelines come in the wake of the recent IPO scam in banks that had violated the `know your customer' norms with regard to opening accounts.he seven banks penalised included three private banks and two foreign banks.

The modus operandi involved the opening of demat accounts with banks under fictitious names and transferring funds to these accounts.

This was a violation of norms as the banks concerned had not verified the credentials of the account holders.

They had also transferred account payee cheques to accounts other than those held under names mentioned on the cheque. In some cases, the accounts were over two years old, which means that the irregularity went on undetected for a long time.

The RBI hopes that the disclosure scheme would prompt more people, like employees of the bank, customers, stakeholders, or NGOs, to point out irregularities without fear.

As per the procedure outlined by the apex bank, the complaint should be sent in a closed envelope to the Department of Banking Supervision.

The name of the complainant should be attached with the complaint; in case of employees, the designation, department and institution and place of posting should be mentioned.

After verifying the identity of the complainant in the case of employees, the RBI may investigate the matter further or call for response from the Chairman or Chief Executive of the bank concerned.

The apex bank will recommend appropriate action including action against the official concerned, steps for redressing losses caused to the bank, and initiation of criminal proceedings.

On the other hand, if the RBI finds that the complaint is motivated, action can be taken against the complainant.

All private and foreign banks should frame a `Protected Disclosures Scheme' approved by their boards of directors in line with this broad framework.

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(This article was published in the Business Line print edition dated January 26, 2006)
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