ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE : KADAPA Circular No. 03-2007-BC-VC Date: 06.01.2007. Incidence of Frauds at Branches Attention of the Branches, Offices and staff is invited to the captioned subject. The incidence of frauds at the branches are in increase on the recent past in the area of loans against Gold, Savings Bank Accounts, cash received on customer accounts, Branch Adjustment Account etc. It is observed that these frauds have taken place at the branches, mainly on account of negligence of the Officers/staff concerned, lack of internal control, non-adherence to systems and procedures, untallied position of accounts and negligence by the inspecting Officers. In this context all the branches are advised to be more vigilant in the above matters and advised to follow the guidelines/systems and procedure and keep the internal control and house keeping upto date. It is to be noted that if the systems and procedures are followed, they will protect employees and the Bank from incurring losses. We bring the below mentioned few points which play a vital role in INTERNAL CONTROL AND HOUSE KEEPING and avoiding frauds. The below mentioned points are neither exhaustive nor conclusive. During the course of preventive vigilance exercises and regular inspection, it is observed that the below mentioned points were not given required importance by the branches. Hence they are listed out for the benefit of the branches and staff, as they are fraud prone areas. 1. Counter foils to the customers are to be issued duly signed by scroll Officer only in respect of cash receipts after receiving the slips duly entered in cashier s scroll, numbered and signed/initialed by cashier under cash received seal. Scroll Officer on receipt of cash slip from the cashier has to verify the contents on counter foil and slip and on getting satisfied about the correctness, he has to sign the counter foil and hand over the same to the concerned customer. He has to enter the slip immediately in his scroll and authorise the slip [by signing] to enable the clerk to enter the slip. As the same is not followed, and counter foils were issued by the cashier without the knowledge of scroll Officer, and without accounting for the amount received in books of accounts, the frauds have taken place in some branches. Contd.---2
-2-2. Slips are to be entered/fed to computers with proper authorisation by the Manager/Officer/Scroll Officer. It is to be noted that no slip, either cash slip or transfer slip should be entered without the authorisation of the Manager/Officer. After the slips are entered, the person who enters the slip has to put his initial for having entered and the person, who checks the entry, has to initial for having checked the entry. Thus any slip will have to bear two initials of Officer/Manager [one for having authorised and another for having checked] and one initial of clerk who enters the slip and one more initial of cashier under cash received seal if it is a cash transaction. In many branches this system is not followed and which resulted in occurrence of frauds in a few branches. 3. In respect of Nithya Nidhi deposit [Daily collection Deposit], additional care is to be taken in following laid down systems and procedures, especially in respect of [i] issuing of new cards [ii] checking of collection register [iii] getting confirmatories from depositors [iv] in signing cards on the first day of the month, before they are given for collection by confirming previous month s balance mentioned by the Agent on the card [v] insisting depositor s signature in confirmation of previous month s balance, and collection made during the month [before the card is received back at the end of the month] [vi] tallying the account without any delay [vii] maintaining of dormant cards register and dormant cards file [cancel dormant cards by writing Dormant in red ink on cards, so that they can not be reused. Whenever the account is revived a new card with the same account number may be issued by noting the same in dormant register] [viii] agents are not to be allowed to have access to the ledgers and arrange LDs. In majority of the branches, the above systems are not being followed scrupulously. 4. Stock of security items received and withdrawals made for use are to be recorded properly. Stock of security items is to be got verified periodically by a person other than the joint custodians. Security items viz. DD pads, FD receipt Books, which are in use, are to be kept under the custody of Officer, during business hours, under lock and key. At the end of the day, they are also to be kept in safe under joint custody. 5. Surrendered cheque leaves are not to be recycled, but they are to be cancelled by tearing the portion meant for drawer s signature. Contd.---3
-3-6. While opening SB Accounts and Term Deposit Accounts [i] obtain Form No.60 or 61 whichever is relevant [ii] Manager/Officer in whose presence the depositor signs the form has to sign across the photograph pasted on the opening form under round seal of the Branch. Both signature and round seal have to come partly on photograph and partly on opening form/specimen card [iii] opening forms/specimen cards are to be kept under lock and key [iv] nomination may be obtained [which is helpful in avoiding unnecessary correspondence/hurdles to the legal heirs in case of death of the depositors in settling the claims] [v] insist for the presence of introducer and see that he signs in the presence of Manager/Officer and if he doesn t sign in the presence of Manager/Officer, confirmation of introduction from the introducer is to be obtained separately and kept with opening forms. [vi] introducer s signature has to be verified and Manager/Officer has to sign under signature verified seal for having verified introducer s signature. [vii] Manager has to sign on the opening forms at the places required. 7. While sanctioning jewel loans, sanctioning authority has to get the jewels verified in his presence by the jewel appraiser by using touch stone method and applying acid. In addition to jewel appraiser s certificate, sanctioning authority has to satisfy himself about the purity by taking jewels into his hands and act prudently. It is to be noted to route jewel loan proceeds through SB accounts of the borrowers. Jewel appraiser should not be given access to the ledgers. At the time of sanctioning the loan, sanctioning authority has to take the possession of jewels, which were verified by the jewel appraiser in his presence. 8. AOD Due Register and Insurance due register are to be maintained properly. If they are maintained month-wise [by allotting a few folios for each month], it will be very convenient for follow up. 9. Due importance is to be given for tallying of accounts. In respect of Branch Adjustment, Sundry Advance and Suspense Accounts, Manager/Officer has to make follow up for closure of long pending items, and keep a record of correspondence made for the closure of long pending items. 10. Cash paid vouchers are to be stitched separately and preserved in safe room as per the guidelines. 11. Whenever cash is taken out from double lock, it is to be entered in double lock register then and there itself. At any point of time the balance as per double lock book should tally with the actual cash in safe [double lock]. Contd.---4
-4-12. Cashiers have to lock their cabins from inside when they are in the cabin and from out side while going out. 13. Secrecy of password is to be maintained strictly by all the users. Branch Manager s password is to be kept in a sealed cover in double lock. 14. ALPM figures are to be tallied with GL figures on daily basis. Further the internal inspectors are also advised to give due importance to systems and procedures, internal control and house keeping aspects while conducting inspection of the branches and also give utmost importance to fraud prone areas. If needed they are advised to submit special report. We once again reiterate that many frauds have occurred due to non following of the laid down systems and procedures and not keeping control over internal control and house keeping. Hence branches are advised strictly to adhere to the systems and procedures, internal control and house keeping to avoid occurrence of frauds. Clarifications required if any to this circular may be sought from Vigilance Cell (VC), Head Office:Kadapa. Please acknowledge receipt of the circular. [M.OBULESU] CHAIRMAN