PREVENTIVE
VIGILANCE
-By Group 9
WHAT IS PREVENTIVE
VIGILANCE
• As we have all heard a popular phrase by Desiderius
Erasmus
“prevention is better than cure”
• The prevention of the disease named FRAUD is
Preventive Vigilance
• And this disease is caused by mainly few bad habits
named
1. Corruption/Bribe
2. Illegal Gratification
3. Abuse of Official Position
4. Having a blind belief at the time checking and cross
To prevent this disease from affecting
our body we have to take care of
each and every part of the body.
For external appearances our CASA,
RAFA and Advances.
For internal operations, our credit
monitoring, NPA recovery, Pre and
Post inspection, vigilant use of power,
eye on colleagues, rotation of the
counters,etc.
Objective of Preventive
Vigilance
Fraud prevention
Risk Mitigation
Regulatory Compliance
Protection of bank’s and customer’s
interest
Surveillance
Types
Preventive Vigilance
Detective Vigilance
Punitive Vigilance
Preventive Vigilance in Cash
Department
Keep the cash cabin locked always
Dual custody of keys
Decoy money to be changed regularly
Keep CCTV footage for min 3 months
Do not announce about cash remittances
Do not use of same vehicle for
remittances
Do not leave any keys in premises
overnight
Maintain proper register for keys
Preventive Vigilance in Banking
Operations
KYC compliance
Proper use of withdrawal instrument
Register for issuance of ATM Cards,
Passbooks, Cheque books, TDR, etc.
Signature verification
Do not share your credentials
Do not authorize transactions
without proper vouchers
Preventive Vigilance in 3rd
Party Frauds
Keep a watch on people lingering around
the branch
Do not allow 3rd party person any access
to vouchers and system
Not to accept any forms in behalf of
others unless specified as a POA
Neither enquiries nor modifications to be
entertained on calls
Issuance of passbook, ATM cards, cheque
books, etc to the account holder.
Verify signature in all manners
Preventive Vigilance in
Advances
Proper Pre Sanction verification
Ensure the identity and purpose of the loan
Cross checking of all documents and
records provided by the applicant
No dues certification for closed loans and
statements of the current running loans
Phase wise disbursement as per the loan
type
Post sanction inspection and verification of
fund utlisation
The DO’s The DON’T’s
Follow the procedures or as per the To create our own point of view and
official circular issued by organisation procedures
and regulatory bodies
Verification of all provided documents Having a blind belief in the regular or
new customer
Your signature is very valuable, check To pass on the work to
the details before using it subordinate/clerk who would not be
doing the verification
The system enteries to be done after Doing the work on calls or in the
obtaining physical papers and influence of superiors or gold valued
consent of the customer customer
The date should be mentioned with No shortcuts in signature.
signature
Accessibilty to be reserved only to Don’t allow customers to access
authorized personnel. certain premises around the staff in
the branch.
Case Study 1
A customer has walked in the branch for
with request for a Home Loan of 30.00
lacs.
He is working with the railway department
and has maintained his salary account
with PNB for last 8 years and is unhappy
with their service provided.
He is ready to provide all the necessary
documents required.
The CIC report is decent with a score of
750 in CIBIL.
After the CIC, the customer has
provided us with the title deed and
related document
LSR has been obtained from the
appellant lawyer with positive remarks
The pre sanction inspection done by
officer, the customer sent car to take
them to the site
On the basis of LSR, pre sanctioning
and branch recommendations provided,
Retail Business Centre has sanctioned
the loan
After sanctioning, the photographs and progress
of the project is reported by the customer.
After completion, officer carried out post sanction
inspection, where they have been welcomed by
the people who are residing in the property and
identified themselves as the cousins of the
owner(applicant)
After 3 months, no repayment has been received
in the loan account and account marked as NPA.
The salary account has received the salary just
for first 2 months and since then no activity in
the account
The bank has started process to recover through
SARFAESI Act and came to know that the land
records are not in the name of applicant
After this, the employer was approached and
found out that the person is suspended from his
What is the role of preventive
vigilance
The first thing we have to verify is his employment
status and salary slips, with his ITRs.
To cross verify the CIC reports with the customer about
past debts.
Obtain the statement of the existing loans and clerance
certificate for the closed loans
Also check the statement of the previous salary
account and conduct of the customer
The LSR report needs to be cross verified as per the
land record mentioned with the Sub Registrar entry
Officer needs to do pre sanction inspection without the
knowledge to the customer.
The recommendation to be written by utmost
carefulness and being vigilent to avoid future NPAs and
fraud.
At the time of post sanctioning, the
applicant has not been asked about the
tenants/cousins living.
The salary account hasn’t be kept
under monitoring
At the time of morgaging, the CERSAI
has not been checked throughly.
There are many mistakes done by the
staff that could have been avoided just
by following some simple vigilance and
this bad debt could have been avoided
Case Study 2
A person has walked in with a request of 6.00 lacs of
personal loan. After the necessary check of transaction, the
customer was told to arrange the necessary required
documents for processing the loan
Customer took 2 months for arranging the same. The
documentation was executed and loan was sanctioned but
not credited to the customers account yet
Before the transfer of funds, BM checked the account
statement and found out that, applicant’s salary has not
been credited from past 2 months
After enquiring, BM came to know that the applicant has
been terminated from the said job and this led to rejection
of the sanctioned loan.
In the 2nd Case Study, we could clearly see that, being a bit
vigilant the Branch Manager has saved not only just a bad
debt, but also has maintained a clean accountability report.
CONCLUSION
THANK YOU
