Bank branch manager defrauds 29 customers

Bank branch manager defrauds 29 customers

KARACHI: During investigation of a case before the Banking Mohtasib Pakistan, a bank revealed that one of its branch manager committed fraud of an amount Rs30 million involving 29 customers.

According to annual report 2020 issued by Banking Mohtasib Pakistan on February 25, 2021, a case was lodged in which a complainant stated that he visited the branch of a bank on March 27, 2017 to partially repay his loan amount and markup against which the Agricultural Field Officer (AFO) gave him deposit slips for Rs. 51,500/, Rs. 524,000/- and Rs. 40,000/-.

He handed over full amount to the AFO to deposit it into his loan account who passed on the amount to another employee of the Bank. However, on August 01, 2017, he received a notice from the Bank and he was surprised to know that his above-mentioned amount of Rs. 524,000/- has not been deposited in his account.

He, therefore, approached the office of BMP for redressal of his complaint. Banking Mohtasib Pakistan office investigation revealed that amounts of PKR 40,000/- and Rs. 51,500/- deposited by the Complainant on 27th March 2017 were accounted for towards his markup and current accounts.

However, the Bank did not account for the amount of Rs. 524,000/- towards his loan for which the Complainant possessed the valid deposit slip.

When the branch called the Complainant to deposit the markup, he raised the objection that why the amount of markup has been increased, although he had deposited the amount of Rs. 524,000/- on March 27, 2017 in the principal amount.

The customer was called to visit the branch to reconcile the amounts. However, his loan was classified as NPL (Non-performing loan). At that time, the customer was advised to regularize his loan so that the increase in pricing of loan is reduced which he later did and the amount outstanding was Rs. 950,000/-.

“The Bank during the hearing revealed that ex-Manager of the branch had committed a fraud of Rs. 30.00 million involving 29 customers, including the Complainant, and claimed amount has been paid to 17 customers.”

The Bank’s representative said that the deposit slips through which the amounts were deposited were genuine, the stamp which was used seems to be the same as they used in the branch and the incident occurred within the premises of the branch.

The Bank suspended the delinquent Manager and initiated disciplinary action against him.

Since the issue of fraud had already been came to light, therefore, to suppress this episode and to avoid classification of loan as NPL that would have attracted provisioning as per Prudential Regulations, the AFO and branch team made out another scheme to arrange adjustment of his loan amount and obtained a signed blank cheque from the Complainant. Past due loan amount was adjusted by making deposits of Rs. 79,300/- and Rs. 950,000/- vide deposit receipt numbers 2785166 and 2785167 respectively, both receipts bear the signatures of a customer.

However, the Complainant had expressed his ignorance about that person and denied having any business consideration with him. Surprisingly, it strengthens the perception of pre –planned scheme woven with malafide intention as fresh loan was sanctioned and disbursed on the same very date i.e. June 26, 2018.

This act on the part of branch’s staff to arrange adjustment of loan and instantly fresh loan that was past due strengthens the stance of Complainant that he has been deprived of Rs. 524,000/- deposited by him to pay off his borrowed money.

The Bank declined customer’s claim simply on the ground that the deposit slip # 1812557 dated 27th March, 2017 for Rs. 524,000 does not bear the genuine stamp of the Branch, hence the receipt is not valid.

The Mohtasib observed that the Bank’s above stance is not plausible as the Manager was authorized by the Bank to carry out banking business on its behalf.

It is a well settled principle of vicarious liability that the employer is liable to fully make good the loss of a customer arising out of a fraud perpetrated by the employee in the course of the employer’s business whether the fraud is done for the benefit of the employer or not.

It is admitted by the Bank in its enquiry report dated April 25, 2018 that the Bank Manager during the banking hours in the branch received amounts from the customers, but he did not deposit the same in their accounts. Actually, he pocketed the amounts. This admitted position of the report of the Bank is a conclusive proof of the claim of the Complainant as prayed by him in his complaint.

The Bank has not taken any defence that this transaction was personal transaction between the Bank Manager and the Complainant.

In view of the foregoing, the Banking Mohtasib held the view that it is a case of vicarious liability and a categorized admission has been made by the Bank representative that the then Manager was involved in the whole process which resulted in depriving the Complainant with a loss of Rs. 524,000/-.

The Bank was, therefore, advised to credit Rs. 524,000/- deposited by the Complainant to adjust Complainant’s loan account with good value date and the Bank may recover the rest of the payable loan amount for which the Complainant had expressed his willingness to pay, during the hearing proceedings. The Bank complied the Order of Banking Mohtasib Pakistan.