Bank frauds in India have opened a can of worms this year, leaving the public questioning concepts such as board, governance, public sector, bankruptcy, and investor transparency with anxiety and anger. As a former RBI Governor raises more questions with the Prime Minister’s Office, it’s time to bring crypto finance to the debate.
Also read: Thai Government Approves Crypto Exchange, Wants Own Wallet
Rajan and RBI – Fraud Concerns Continue
In a note to the Chairman of Estimates Committee, former RBI Governor Raghuram Rajan has put together a list of high profile cases of banking frauds. It has been sent to the Prime Minister’s Office (PMO) for a coordinated action.
The note to the Parliamentary panel details serious concerns as to the rise in size of frauds in the public sector banking system. Urgency and speed has been expected by ex-RBI Rajan, who mentions use of new tools, stringent penalties for non-compliance, swift enactment of the Bankruptcy Code and an AQR (Asset Quality Review) process.
Fraud cases at a number of public sector banks – as well as private banks – have brought the opacity of the current banking business model into the spotlight along with awareness of the oversight of the Board of Directors.
Stop Spinning the Wheel – Reinvent It
A recent report on Indian digital customers by payments company FIS indicates 18% of them have reported a fraud in the past year. The most affected age group was between 27 to 37 years – also the ones who are more inclined to use digital banking apps.
With recapitalization plans as huge as Rs 1.35 trillion announced last year, and the total capital infusion into banks over the past decade rounding to some Rs 2.65 trillion as per other media reports, this is also a time to bring more transparency and disintermediation into the overall radar of RBI in India. After the 2008 crisis in the US, and bail-outs to many collapsing global economies across the world, the global financial world can use some radical ways to rethink banking and money.
Something that can complement or fill the gaps that erstwhile banking systems have inflicted upon investors and customers – something like blockchain and cryptocurrency, perhaps. Where trust is not subject to the dangers of being broken via such frauds, and where trust, ironically, exists in the DNA of a trustless system.
A decentralized fabric of transactions may not be a plug-and-play answer to some of the present woes of the BFSI sector, but it could be a parallel or phased answer perhaps. There is no harm in considering more options, including cryptocurrency-based solutions, to inject some much-needed transparency into the industry.
What solutions would you suggest to fight fraud in the banking sector? Let us know in the comments section below.
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Author: Pratima Harigunani
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