The India Watch

Government 'Fraud Alert' System Strengthened To Prevent Nirav Modi-Like Scams: Report

According to reports, the Centre has been attempting to improve the mechanism that notifies authorities to cases of fraud and money laundering against organisations seeking bank loans totaling more than Rs 50 crore. The action has been taken to prevent future frauds of the calibre of Nirav Modi and Vijay Mallya.

The creation of warnings from the Central Economic Intelligence Bureau (CEIB) has reportedly been expedited by the Centre, according to a Times of India story.

Any firm requesting a loan of more than Rs. 50 crore must submit a report to the CEIB, which is required of public sector banks (PSBs). This must be completed during the pre-approval phase.

According to the article, the finance ministry has now made it mandatory for CEIB to produce information concerning all money laundering and tax evasion investigations currently pending against such organisations within 15 days after meeting with the RBI, Indian Banks' Association, and representatives of all government banks.

According to sources cited by the Times of India, email addresses have also been established at PSBs and CEIB to assist banks in making educated decisions before making high-value loans.

In the process, the administration has also chosen to do away with all paper-based offline communication. Every report the CEIB provides must be documented, along with the actions the banks take.

According to data cited in the paper, the approach is yielding benefits since banks requested over 6,000 of these reports from CEIB in the fiscal year 2023 as opposed to just over 1,300 the year before.

The finance ministry's insistence that banks get CEIB reports before to making any high-value loans was another factor contributing to the rise in requests.

The CEIB has reportedly kept a database of more than 2.5 lakh economic criminals, special businesses, or unusual people. It is also aiming to provide each of these organisations a unique code that will facilitate the rapid generation of notifications.

All cases brought against an entity will be identified by the code, facilitating rapid access to this data for authorities. According to a story in the Economic Times, a repository known as National Economic Offence Records (NEOR) is being created.

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