Rotameter Manufacturers to forensic audit

The IBA has empanelled 39 audit firms for conducting forensic audit of frauds exceeding Rs 50 crore in banks.Similarly, 73 auditing firms have been indented for forensic audit in banks where the amount involved in frauds is less than Rs 50 crore."Prior to assignment and engagement, member banks need to invite price bids from the empanelled audit firms," the IBA said.Earlier, the IBA had invited applications from chartered accountant firms for empanelment to take up assignments relating Rotameter Manufacturers to forensic audit of frauds up to Rs 50 crore and frauds above Rs 50 crore in the banking industry with a view to recovering money and curbing such practices.Conceed over high incidence of frauds in banks, the Reserve Bank had operationalised a Central Fraud Registry (CFR) as a searchable centralised database for use by banks in January 20 last year.The reasons for fraud, according to the RBI, include gaps in credit underwriting standards, liberal cash flow projection at the proposal stage, lack of continuous monitoring of cash flow and cash profits (Ebitda), and lack of security perfection.

 This was undeniably a laudable objective, but what did it fetch in retu must be a question that needs to be answered.Sources in the govement seemed to believe that about Rs 4-5 lakh crores would not be deposited back as they would be money with dubious antecedents. This would then be the RBI’s bonus, which could be used to refinance the non-performing assets (NPAs) burdened PSU banks. But this is not to be, and most of the cash outside, in flow or stock, has been deposited. So what was said to be the unsaid expectation is now best left unsaid.But this doesn’t mean that the three main objectives stated by Mr Modi remain unrealised.Quite clearly there was a good deal of tax-evaded income, counterfeit notes and terrorist funds in the system. Only counterfeit cash would have been filtered out in this first filtration. The tax-evaded incomes will now be searched out and large deposits from the usual suspects and unexpected sources will be scanned with diligence, both for the nation’s as well as the tax collector’s benefit.

 How much will fetch the exchequer is not clear, but we can safely assume it will be a tidy sum.Last year, the RBI recorded filtering out about Rs 29 crores of counterfeit notes. But not all counterfeit go back to the banks, though in theory at some stage or the other they will have to. How much could this be? We have often heard of a figure of about Rs 20,000 crores of locally manufactured and Pakistani counterfeits in circulation. If it is in the flow these notes will sooner or later be intercepted at the final stage of their life when they come to the RBI for their obsequies.We will have to await this bill.Millions of farmers, too, have lost crops and produce due to the sudden drought of cash, which has impeded both sowing and harvesting. Farmers and the retail trade, which sells perishables like fruits and vegetables, have suffered huge losses due to the abrupt compression of demand induced by the demonetisation. The motorbike industry has for long been the bellwether of rural prosperity.