In February 2022, the Punjab National Bank (PNB) uncovered a borrowal fraud of Rs 2060.14 crore in the Non-Performing Asset (NPA) account of IL&FS Tamil Nadu Power Company Ltd. This unfortunate incident highlights the need for financial institutions to implement better risk management strategies and internal controls to prevent such scams from occurring in the future.
One digital tool that can aid in preventing fraud in transactions between buyers and sellers is the Castler escrow system. It is a secure and transparent digital system where a third party holds and regulates the payment of funds until the transaction is complete. However, the Castler escrow system would not have prevented the IL&FS Tamil Nadu Power Company Ltd scam because it was a case of fraudulent borrowal from the NPA account.
In situations like these, financial institutions must have strong anti-fraud policies and conduct regular audits to detect and prevent fraudulent activities. In fact, the Punjab & Sind Bank (PSB) had reported IL&FS Tamil Nadu Power Company Ltd as a bad asset with outstanding dues of over Rs 148 crore and informed the Reserve Bank of India.
It is crucial to exercise caution and verify the authenticity of any offers before making payments or transfers, particularly when dealing with large sums of money. By implementing better risk management strategies and internal controls, financial institutions can prevent fraud incidents like the IL&FS Tamil Nadu Power Company Ltd scam.
In conclusion, while the Castler escrow system is a valuable tool for preventing fraud and ensuring secure transactions in the digital space, it is not applicable in cases of fraudulent borrowal from NPA accounts. The IL&FS Tamil Nadu Power Company Ltd scam emphasizes the need for financial institutions to have strong anti-fraud policies and conduct regular audits to prevent fraudulent activities. As such, verifying the authenticity of offers before making payments or transfers is essential to prevent scams and protect oneself from financial losses
