Mumbai: Reserve Bank of India governor Shaktikanta Das on Wednesday urged heads of select public and private sector banks to step up efforts against mule accounts and asked them to intensify efforts to curb digital frauds.
In a meeting with the bank chiefs, which was also attended by RBI deputy governors M. Rajeshwar Rao and Swaminathan J., Das emphasized the need for lenders to ensure robust cybersecurity controls and asked them to effectively manage third-party risks. He also highlighted the importance of further strengthening the governance standards, risk management practices and compliance culture in banks.
Mule accounts are bank accounts that serve as conduits in money-laundering process, receiving funds from illicit activities and then transferring them to other destinations. The RBI, National Payments Corporation of India, and the ministry of home affairs are working closely with financial institutions and technology security firms to crack down on such bank accounts.
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Other issues that were discussed include the persisting gap between credit and deposit growth, trends in unsecured retail lending and liquidity risk management. The bankers also discussed the usage of rupee for cross-border transactions and credit flows to small businesses.
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In its previous meeting with banks in February this year, the RBI had asked them to continue to maintain vigil around build-up of risks, if any. It also highlighted the issues relating to business model viability, outlier growth in personal loans, adherence to co-lending guidelines and bank exposure to NBFC sector, among other things.