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1) The document provides examples of operational risk losses categorized into fraud and non-fraud events experienced by banks.
2) Fraud events include losses due to unauthorized transactions, theft, forgery, and fraudulent loans.
3) Non-fraud losses are from events such as natural disasters, hardware/software failures, penalties for regulatory reporting mistakes, data errors, and claims against the bank.
1) The document provides examples of operational risk losses categorized into fraud and non-fraud events experienced by banks.
2) Fraud events include losses due to unauthorized transactions, theft, forgery, and fraudulent loans.
3) Non-fraud losses are from events such as natural disasters, hardware/software failures, penalties for regulatory reporting mistakes, data errors, and claims against the bank.
1) The document provides examples of operational risk losses categorized into fraud and non-fraud events experienced by banks.
2) Fraud events include losses due to unauthorized transactions, theft, forgery, and fraudulent loans.
3) Non-fraud losses are from events such as natural disasters, hardware/software failures, penalties for regulatory reporting mistakes, data errors, and claims against the bank.
P&L Head PLOE 061: Operational Risk Losses due to frauds. Description Losses due to Fraud (Forgery, Theft, Robbery, Unauthorized Activity involving internal party and or third party) Sr. No. Examples of loss events 1 Unauthorized payment made / payment made against fraudulent withdrawal 2 Loss due to operations in Dormant Account; Unauthorized transfer of funds 3 Cash missing from safe; Cash removed by cashier; theft of cash by staff; cash shortage. 4 Misappropriation of funds by cashier(breach of trust) 5 Loss due to dacoity, cash in transit, burglary, theft, etc.; Suspense debits (amount written off due to robbery) 6 Fraudulent withdrawal through ATM; Fraud by staff through credit cards/ ATM cards 7 Loss due to forgery: Fraudulent withdrawal (from-SB/CD a/cs ) (a)Through forged cheque/signatures; (b)Through forged signatures on stolen cheques, withdrawal slips; fraudulent encashment; payment of forged cheque; payment of forged DD. 8 Financing of fictitious borrowers 9 Misappropriation of assets charged / Bank's assets 10 Breach of delegation of powers and non-ratification 11 Involvement of staff: Frauds in advance a/cs (CC, T/L, Housing loans/Personal loans/ mortgage/ OD) through submission of fake title deeds/ fake sales deeds/ fake documents; Non-Creation of Equitable mortgage of the property charged to the Bank. 12 Involvement of staff: Frauds in a/cs dealing with LCs and Bank Guarantees; Frauds through Bills Purchase/Negotiation 13 Involvement of third party: Frauds in advance a/cs (CC, T/L, Housing loans/ Personal loans/ mortgage/ OD) - through (a)Submission of fake title deeds, fake sales deeds, fake documents, impersonation of guarantor/borrower/seller; (b)Connivance with valuer &property price inflated; (c)Offering security of property already mortgaged to another bank(multiple mortgages); (d)Selling of part or whole of mortgaged property without prior approval from the bank; (e)Loan against pledging of spurious ornaments; (f)Misappropriation of loan amount/ encashment of pay order in name of the third party(builder/vendor) 14 Losses to the Bank resulting from a default of a loan where it was determined that the loan had been obtained through fraudulent documents. 15 Losses to the Bank resulting from unauthorized trading. 16 Hacking of Website / phishing
P&L Head PLIP034: Operational Risk Losses due to non-fraud events. Description Losses due to: (a) Damage to physical assets from natural disasters/ floods/ fire/ accidents etc. (b) Failure of hardware, software, telecommunications. (c) Penalties, Failed transactions processing, Missed deadline or responsibility, Non-reporting, Data entry error, TODs in accounts, Credit cards write off. (d) Failure to meet a professional obligation; Fiduciary breaches; Guidelines violations; Product defects. (e) Claim against bank by employees due to service rules or discrimination. Sr. No. Examples of loss events ( a ) 1 Damage of Currency Notes/ records/important documents like loan documents/ stamp papers/ stationery due to fire/flood/other calamities/disaster etc. 2 Damages to Bank's Vehicles/ Properties due to flood, fire, earthquake etc. 3 Repair and maintenance of Bank's own or rented premises damaged due to fire/flood/other calamities/disaster 4 Repair and maintenance of furniture & fixture/ vehicles damaged due to accident/fire/flood/other calamities/disaster 5 Loss on sale of Furniture & Fixture/ vehicles damages by accident/ fire/ flood/ other calamities/disaster 6 Furniture & Fixture/ Vehicles write off due to damage by accident/ fire/ flood/ other calamities/ disaster 7 Other loss due to fire/ floods/ landslides/ other calamities/ disaster ( b ) 8 Losses due to failure of system/ hardware/ telecommunications; Business Continuity Failure. 9 Losses caused by interruptions of communication lines, e.g. telephone lines, security access network (staff cannot enter the building) ( c ) 10 Penal interest charged by RBI for non-reporting / misreporting / wrong reporting for amount withdrawn from chest 11 Penalty by RBI on non/late/wrong reporting of Statutory return DSB-I, II, III, Form X, Form A, etc. 12 Penalty for non-payment or delay in remitting ECGC premium 13 Penal interest on delay in remitting Govt. dues collection; 14 Penalty for late submission of Tax Return i.e. Form 16, 24, ST-3, etc. 15 Penalty/interest for delay in payment of Income tax, Service tax, etc. 16 Interest compensation paid for delayed collection of RBI bonds 17 Loss due to wrong data captured: wrong entry; double credits; clearing difference; untraceable entry 18 Compensation paid to customer as per directions of Banking Ombudsman/ Compensation paid on account of Judgement awarded by State Consumer forum/ Penalty imposed on bank by Enforcement Directorate for fraud committed in NRE account by staff/ MACT-accident claims 19 Miscellaneous losses due to missed deadline or responsibility 20 Write off due to passing of wrong vouchers 21 Failure to follow up overdue/out of order accounts: a)India Card TOD; b)TODs in a/cs; c)wrong posting leading to TOD in the a/c; d)A/cs overdrawn; 22 Loss due to Time Barred Documents (stale stamped docs) 23 Losses to the Bank resulting from incorrect/ incomplete client records. 24 Losses to the Bank resulting from errors in data entry through oversight, miscalculation, or result of overwork, inability or failure to rectify errors that have been caught but not corrected. 25 Losses as a result of failed/ late settlement of trades/ stock lending. ( d )
26 Interest paid on delayed collection of outstation instruments; cheques lost in transit; Dividend Warrants lost in transit; Collection of cheques pending 27 Interest Penalty for delayed tax remittance/ TDS 28 Penalty imposed by IT due to non-issuance of TDS certificates within prescribed time limit 29 Write off of old reconciliation entries 30 Loss on account of misuse of confidential data/ sharing of password 31 Loss due to mis-selling of products (Claims by buyers of product) 32 Failure to insure assets adequately 33 Shortage/Defective/Forged notes remitted to RBI; Forged notes found while lodgement with RBI; Recovery of forged notes by Correspondents during lodgement. 34 Write off due to soiled notes, half value/rejection 35 Claims on account of passing of stop payment cheques 36 Double payment of remittances; interest erroneously credited over & above the applicable rate. 37 Penalties/ fines due to wrong execution/ non-registration/ under stamping of other legal documents 38 Access of systems to unauthorized vendor 39 Loss due to failure of vendor on outsourced services. 40 Loss due to litigation with vendor ( e ) 41 Claim against the Bank by employees due to service rules 42 Law charges in labour dispute/service matter cases 43 Compensation paid in labour dispute cases