In a bid to fortify the financial sector against potential frauds and ensure meticulous risk assessment, the Central Economic Intelligence Bureau (CEIB) has urged the Department of Financial Services in the Finance Ministry to mandate clearance for all private banks, akin to the process for government banks. This move aims to scrutinize companies for any ongoing enforcement cases before extending loans, making it challenging for firms under ED/CBI investigation or labeled as NPAs to secure funds.
The current system, limited to public sector banks, includes an ‘antecedent verification report’ that offers substantial safeguards in risk evaluation and mitigation. This report, generated by CEIB, aids financial institutions in conducting due diligence to detect fraudulent activities promptly. Notably, in the fiscal year 2022-23, CEIB processed over 6,000 such antecedent reports for loans amounting to a staggering Rs 39 lakh crore. This marked a significant increase from 1,300 applications in FY 2021-22, totaling Rs 4.5 lakh crore.
For government banks, obtaining clearance from CEIB is mandatory for sanctioning high-value loans. CEIB meticulously examines economic offenders’ data before generating reports, assisting banks in informed decision-making regarding loan approvals. However, the discretion to grant or deny loans to entities under investigation remains with the concerned banks.
Entities categorized as NPAs or facing probes for fraud or money laundering are under continuous surveillance. These reports draw from a comprehensive economic offenses database maintained by CEIB, which collates data from more than 18 enforcement agencies. This database is set to be relaunched as the National Economic Offence Record, enhancing efficiency in tracking economic offenses in real-time.
In a forthcoming initiative, CEIB is contemplating the issuance of a ‘Unique Economic Offender Code’ for individuals or companies accused of economic offenses. This identification number, linked to Aadhaar for individuals and PAN for companies, aims to streamline tracking and monitoring of economic offenders.
