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Suspected fraud in the clearance of counterfeit cheques


 " In 2001, a serious fraud was detected during the course of 'Cheques and Bills' reconciliation in the Construction unit of Jhansi division of this Railway. Counterfeit RBI cheques had been printed on Central Railway's account and the same had been encashed in U.P. Co-operative Bank, Kanpur in favour of an unknown person. The cheques had been cleared through RBI, Kanpur and the amount credited to the party's account. Two cheques were issued totalling Rs.21,01,220/-. Police investigations are still going on.

The Central Railway Administration had written to the bank requesting them to reverse the debit of Rs.21,01,220/- raised against Central Railway as it was clear that these counterfeit cheques have been cleared without adhering to the mandatory precautions by the bank. The lapse on the part of bank were as under:

-- The counterfeit cheques were of the series other than the one used to draw cheques on RBI Kanpur.
-- All cheques valued more than Rs.10 laakhs should necessarily bear signatures of two authorised signatories whereas in the subject case, the cheques were having only one signature.
-- These counterfeit cheques were devoidd of watermark and transparent cellotape were not pasted on the amount column, as is the practice on the Railway.
It is clear that the counterfeit cheques had been cleared by the bank without verifying their authencity.

Precautions to be taken to arrest recurrence of such incidents

1. Effective reconciliation can only solve this problem. By linking debit and credit immediately on receipt of scrolls, one may detect these kinds of frauds without loss of time.

2. Suspense head 'Cheques and Bills' to be closely monitored. The balance under this head should be reviewed regularly and the amount of cheques remaining uncashed for six months after the date of issue should be credited to Abstract 'Z' . The particulars of all uncashed cheques so adjusted in account should be kept in a Special Register to be maintained for the purpose to facilitate disposal of requests for fresh cheques that may be received subsequently.

3. All precautions should be taken for safe custody of unused cheques in Accounts office.

Preventive Measures

A similar fraud had occurred 4 years back where counterfeit cheques amounting to Rs.4.28 crores were encashed by fraudulent persons. The fraud had occurred due to system deficiency on the part of Bank and after prolonged correspondence and investigations, Railway's account was credited with the encashed amount of Rs.4.28 crores.

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