NDIC to probe banks over rising fraud cases

Image result for Managing Director, NDIC, Umaru Ibrahim

The Nigeria Deposit Insurance Corporation on Sunday said it would investigate some banks over the high incidence of fraud and forgeries caused by the non-rendition of returns to the corporation.

The corporation will also be beaming its searchlight on the issue of malpractices involving members of staff of banks, who were either dismissed or had their appointments terminated on the grounds of fraudulent activities.

Sections 35 and 36 of the NDIC Act No. 16 of 2006 (as amended) require all Deposit Money Banks to submit monthly information/returns on fraud and forgeries to the corporation.

The NDIC made the decision to probe the banks in the light of the most recent report from its off-site supervision of the DMBs, which revealed the number of fraud cases attributed to internal abuse by members of staff of banks had increased from 231 in 2016 to 320 in 2017.

The 2017 cases of fraud were 38.53 per cent far above the figures reported in the previous year.

Confirming the development, the Head, Communications and Public Affairs Unit, NDIC, Mohammed Ibrahim, said the 26 responses received from banks in 2017 cited 26,182 cases of fraud and forgeries, which were 56.30 per cent higher compared to the 16,751 cases reported in 2016.

He stated that the amount involved in the fraudulent activities documented by the corporation rose by N3.33bn from the N8.68bn reported in 2016 to N12.01bn in 2017.

However, he noted that the actual loss slightly decreased by N24.42m or 1.03 per cent from N2.39bn in 2016 to N2.37bn in 2017.

Ibrahim said, “Internet/online-banking and Automated Teller Machine and card-related fraud types constituted 24,266 or 92.68 per cent of all the reported cases, resulting in N1.51bn or 63.66 per cent of losses in the industry in 2017.

“The report also documented other miscellaneous crimes such as fraudulent transfers/withdrawals, cash suppression, unauthorised credits, fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges, and presentation of forged or stolen cheques.”

Ibrahim added that the 22 licensed commercial banks and four merchant banks rendered 286 returns on dismissed workers as a result of fraud and forgeries during the 2017 period.

He stated, “Out of the 26,182 fraud cases reported by the 26 licensed banks, 320 cases were attributable to internal collaboration by bank staff. A total of 320 bank employees had their appointments either terminated or were summarily dismissed in 2017, as against 231 in 2016.”

“That represented an increase of 38.53 per cent in the total number of fraud cases reported in 2017. However, the losses arising from the reported cases decreased from N760m in 2016 to N682m, or about 11.43 per cent in 2017.”

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