By InvestAdvocate

Lagos (INVESTADVOCATE)-The Nigerian Deposit Insurance Corporation (NDIC) has reported attempted frauds and forgeries involving over N21 billion in the Nigerian Banking Sector in year 2010.

This was contained in an extract of the year 2010 Annual Report of the Corporation, made available to www.investadvocateng.com in Lagos Nigeria.

Despite this number, the extract of the Report stated that the number of reported cases of attempted or successful frauds and forgeries in the Nation’s Banking Industry declined in the review period by 49.15 percent (49.15%).

“There were a total of 1,532 reported cases of attempted frauds and forgeries involving over N21 billion in 2010 compared with 1,764 reported cases of frauds and forgeries involving over N41.3 billion in 2009. The expected loss components of the reported cases of frauds and forgeries that is, those whose probability of recovery was low as well as those not fully covered by Fidelity Insurance Bond amounted to over N11.68 billion  in 2010 compared to over N7 billion in 2009” the Report said.

According to NDIC, 10 Banks reported to have the highest number of cases were responsible for 51.08% of the total amount involved in year 2010 compared to 90.10% in year 2009

“The total amount involved, which stood at N10.87 billion in 2010 was considerably lower than the 2009 figure of N37 billion” the NDIC Report said.

Further to this, an analysis of the types of frauds and forgeries perpetrated during the year under review showed that the commonest types were the following: ATM fraud; fraudulent transfers/withdrawals; lodgment of stolen warrants; presentation of forged cheques; suppression of customer deposit; granting of unauthorised credits; loss of money to armed robbers and outright theft.

The Corporation’s Report, affirmed that a further analysis of the types of frauds and forgeries perpetrated in 2010 showed that the perpetration of ATM frauds and granting of authorised credits accounted for the largest proportion.

It was also reported that a total of 357 Bank staff were involved in the frauds and forgeries in year 2010 “a decrease of about 45.58% when compared with the previous year’s figure of 656. Of the total, core operation staff such as supervisors, officers, accountants, managers, executive assistants, clerks and cashiers totaled 286, thus accounting for about 80.11%. That represented an increase of 14.41% points relative to the 2009 position” the NDIC Report affirmed.

The Nigerian Deposit Insurance Corporation said that the causes of frauds and forgeries can be classified under two generic factors namely the institutional or endogenous factors and environmental or exogenous factors.

“Institutional causes of frauds and forgeries in Insured Banks include poor accounting and weak internal control systems, ineffective supervision of subordinates, uncompetitive remuneration and perceived sense of inequity in reward, disregard of know your customer (KYC), rules etc.

Environmental causes of frauds include undue societal demands, low moral values, slow and tortuous legal process, lack of effective deterrent or punishment and at times reluctance on the part of individual Banks to report fraud cases due to the negative publicity it could attract to their image” the Report stated.

NDIC further affirmed that the given the quantum of frauds and forgeries in 2010, it is important that Insured Banks strengthen their operational risk management frameworks in the areas of internal control and security systems to reduce the incidence of frauds and forgeries.

“Insured Banks should also thoroughly screen prospective employees by obtaining status reports from previous employers and relevant agencies and should desist from deploying casual workers staff to sensitive positions. Insured Banks should also endeavour to educate their customers on the use of the ATM and other e-banking services as well as the need to safeguard their Personal Identification Numbers (PIN).