Stung by the recent housing loan scam and the Rs 300-crore Citibank fraud involving a relationship manager in Gurgaon that have dented the image of the domestic banking industry, the Indian Banks Association (IBA) has proposed to chalk out a new way to verify the authenticity of documents provided by loan applicants.

The IBA has also written to the Institute of Chartered Accountants of India (ICAI) seeking suggestions to help its policing of fraud.

While assessing the credit worthiness of a potential borrower, banks go through several documents but we now want to design a methodology by which we know that the signatures or information provided are not fake, a public sector bank chairman who did not wish to be identified told Hindustan Times.

Sources in state-owned banks also said that the central vigilance officers (CVOs) are likely to increase their clasp on the banks and monitor all mid to high value bank transactions to ensure that incidents of frauds are reduced. The CVC could also seek reports pertaining to certain transactions. Multiple home buyers are already being subjected to a more stringent mode of scrutiny and credit appraisal.

The finance ministry has already asked the banks to adopt all means to eliminate possibilities of any fraud. The Reserve Bank of India (RBI) has also directed banks to fix staff accountability to prevent frauds. Banks should ensure that the reporting system is suitably streamlined so that frauds are reported without any delay, the central bank said in a circular last year.