The Reserve Bank of India (RBI) has expressed concern over a large number of bank accounts being utilized for fraudulent activities and loan evergreening. RBI Deputy Governor Swaminathan emphasized the need for banks to uphold the integrity of financial reporting and prevent misinterpretation of regulations.
Swaminathan highlighted the regulator’s efforts to encourage non-banking financial companies to improve their disclosure quality, especially concerning the Expected Credit Loss (ECL) framework.
In his recent address, Swaminathan pointed out that the RBI has identified numerous internal accounts in certain banks with no apparent valid purpose. These accounts, according to Swaminathan, are at high risk of being misused for fraudulent transactions and loan evergreening. He urged Chief Financial Officers (CFOs) to minimize these accounts to an essential minimum to mitigate potential misuse.