The Reserve Bank of India has asked banks to put in place appropriate systems to check fraudulent withdrawals of non-resident Indian deposits.

The RBI feels non-observance of prescribed guidelines and procedures by branch officials was behind the rising incidence of large-value frauds in NRI deposit accounts and pointed out that such frauds would have a bearing on the image of the bank concerned and also on the reputation of the industry.

The modus operandi of fraudsters was to send facsimile or email messages to branch officials for debiting NRI accounts and remitting the funds or maturity proceeds of term deposits to third party accounts, maintained mostly with foreign banks.

The RBI has noted that branch officials receive fake fax or emails for debiting NRI accounts and remitting the funds or maturity proceeds of term-deposits to third-party accounts, maintained mostly with foreign banks.

Branch officials accept these fraudulent messages as genuine messages and act upon the instructions for remittance. The frauds come to light only at a later date when the original depositor denies issuing such instructions. In a communication, the RBI had asked Indian Banks' Association to tell its member banks to re-examine their guidelines if required and put in place systems to ensure that prescribed guidelines and procedures are followed by bank branches meticulously.

"With more and more non-personal interface in banking transactions, the RBI has expressed some concern. A number of banks reported frauds to the RBI following which the RBI asked banks to discuss and formulate some guidelines," banking sources said.

Banks, however, have submitted to the RBI that adequate precautions were being taken while acting on facsimile message of customers. "Banks were of the view that checks and balances were already in place," said the sources said.

Banks have said that accounts of NRI customers were debited and remittances made to third parties only after verifying the signature of the customers on the facsimile messages. Some banks also call up customers to verify the authenticity of the message before actually acting on the instruction.