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Advisory Board on Banking and Financial Frauds

2023 AUG 30

Preliminary   > Economic Development   >   Indian Economy and Issues   >   Banking sector

Why in news?

  • The Central Vigilance Commission (CVC) has reconstituted the Advisory Board on Banking and Financial Frauds (ABBFF) to fortify the examination of bank fraud cases.

About Advisory Board on Banking and Financial Frauds (ABBFF)?

  • ABBFF serves as the first-level examination body for bank fraud cases before they are referred to investigative agencies like the Central Bureau of Investigation (CBI).
  • ABBFF is empowered to conduct periodic fraud analysis within the financial system.
  • It offers insights and policy recommendations related to fraud prevention and management to regulatory bodies like the Reserve Bank of India (RBI) and CVC.

Composition and Tenure:

  • The reconstituted ABBFF board includes the Chairman and four other members, each contributing their expertise to fraud-related matters.
  • The Chairman and Members of ABBFF hold their positions for a tenure of two years.

Mandatory Referrals and Advisory Role:

  • All public sector banks, insurance companies, and financial institutions are required to refer fraud cases exceeding Rs. 3 crore to ABBFF before initiating criminal investigations.
  • The advice provided by ABBFF regarding criminality and malafide (acting in bad faith or with dishonest intentions) involvement of officials must be considered by the competent authority.
  • ABBFF's purview extends to providing advisory support for cases referred by the CVC or the CBI.

Add ons:

  • Notably, the concept of a "sunset clause," which could have limited actions against bankers for credit decisions after a specified period, has not been included in ABBFF's functioning.

PRACTICE QUESTION

With reference to ‘Advisory Board on Banking and Financial Frauds’, consider the following statements:

1. It serves as the first-level examination body for bank fraud cases before they are referred to investigative agencies

2. Financial fraud cases in both the public and private sector banks are referred to Advisory Board on Banking and Financial Frauds

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer