**Executive Summary:**
This RBI circular (RBI201516378) addresses the issue of the public being duped by dubious investment schemes and fraudulent lottery calls. It urges all scheduled commercial banks, including Regional Rural Banks and Local Area Banks, to publicize cautionary messages in their branches to increase public awareness and financial literacy. Banks are encouraged to use posters, pamphlets, or notices with specific warnings and to sensitize their staff to this issue.
**Key Points / Main Content:**
* **Problem Statement:** Unscrupulous entities are deceiving the public with dubious deposit/investment schemes and lottery scams, often promising returns higher than bank deposits. This is fueled by a lack of financial literacy.
* **RBI's Role:** The RBI is actively working to educate the public about safe investments.
* **Banks' Role:** Banks are requested to supplement RBI's efforts through their branch networks by:
* **Displaying Cautionary Messages:** Designing and displaying posters/pamphlets/flyers with specific warnings (provided in the circular) in bank branches, ATMs, and Business Correspondent Points, preferably in the local language.
* **Staff Sensitization:** Sensitizing field staff to the issue of dubious schemes.
* **Information Sharing:** Encouraging branch officials to share market intelligence on dubious schemes with their Regional Offices, which should then inform the RBI Regional Office.
* **Indian Banks Association (IBA):** The IBA will consider developing a common design for the cautionary messages for banks to adopt.
* **Effectiveness:** Measures have to be pursued continuously for a long period of time to be effective
**Impact Analysis**
* **Scheduled Commercial Banks (including Regional Rural Banks and Local Area Banks):**
* *Impact:* Banks are expected to actively participate in educating the public about financial risks and fraudulent schemes. This may require allocation of resources for designing, printing, and displaying awareness materials, as well as training staff.
* *Action Required:* Design and display cautionary messages in branches/ATMs/Business Correspondent Points, sensitize staff, and share market intelligence with RBI.
* **General Public:**
* *Impact:* The public will benefit from increased awareness of fraudulent schemes and safer investment practices.
* *Action Required:* Be vigilant, informed, and cautious when considering investment opportunities or responding to unsolicited offers. Utilize provided resources (RBI, SEBI, IRDA websites) and consult financial advisors when in doubt.
* **Reserve Bank of India (RBI):**
* *Impact:* The RBI's efforts to promote financial literacy will be amplified by the banks' participation.
* *Action Required:* Continue to provide resources and guidance, and receive information from banks regarding dubious schemes.
* **Indian Banks Association (IBA):**
* *Impact:* The IBA is tasked with a coordination role to help banks implement the policy effectively.
* *Action Required:* Consider developing a common design for cautionary messages for adoption by individual banks.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking sector and promoting financial literacy.
Scheduled Commercial Banks: Banks that are listed in the Second Schedule to the Reserve Bank of India Act, 1934. Includes Regional Rural Banks and Local Area Banks.
Department of Banking Regulation (DBR): A department within the Reserve Bank of India responsible for regulating banks.
Indian Banks Association: An association of banks in India.
www.sebi.gov.in: Website of the Securities and Exchange Board of India (SEBI)
www.irda.gov.in: Website of the Insurance Regulatory and Development Authority of India (IRDAI)
Automated Teller Machines (ATMs): Electronic banking outlets that allow customers to complete basic transactions without the aid of a branch representative or teller.
Business Correspondent Points: Outlets where authorized representatives of banks provide services like cash deposit and withdrawal.
RBI/2015-16/378
DBR.No.Leg.BC.93/09.07.005/2015-16 April 21, 2016
The Chairman/Chief Executives of
All Scheduled Commercial Banks including Regional Rural Banks/
Local Area Banks
Dear Sir,
Publicity in the bank branches cautioning public against
placing deposits in dubious schemes
You may be aware that in the recent years there have been several incidents of
unscrupulous entities duping general public by floating various dubious schemes for
mobilisation of funds by way of deposits/investments etc. Many a time such schemes
are projected as investments in reality, farms, and other miscellaneous products.
However, invariably such schemes lure gullible public by offering returns which are
much higher than that offered by banks on deposits.
2. It has also come to the notice of the RBI that the customers receive telephone
calls relating to their winning lotteries/prizes etc. and depositing money in an
unknown account, following which the amount of lottery would be remitted to them or
credited to the account they would advise. The customers believing such fraudulent
messages remit the required amount apart from divulging details of their accounts to
the fraudsters.
3. We believe that the absence of financial literacy and lack of alertness to fraudulent
schemes/calls are the main reasons behind the innocent depositors falling prey to
such schemes. These episodes, apart from impacting the public at large, have
repercussions on the banking sector, as the money that is misappropriated by these
____________________________________________________________________________________
ब��कंग �व�नयमन �वभाग, क�द्र�य कायार्लय, 12वी ं और 13वी ं मंिज़ल, क�द्र�य कायार्लय भवन, शह�द भगत �सहं माग,र् मंबु ई 400001
टेल�फोन /Tel No: 22661602, 22601000 फैक्स/Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 5692
Department of Banking Regulation, Central Office, 12th & 13th Floor, Central Office Bhavan, Shahid Bhagat Singh Marg, Mumbai - 400001
Tel No: 22661602, 22601000 Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 5692RBI,DBR,CO - 2 - continuation sheet
unscrupulous entities should have come to the banking system augmenting banks’
deposit base.
4. The RBI has been taking various steps in making the public beware of such
dubious schemes and in promoting financial literacy and awareness among the
general public about safe and secured investments. In this context, it is felt that the
wide branch net-work of commercial banks could significantly supplement the RBI’s
efforts.
5. In view of the above, banks may in their own interest and as customer education
effort in the interest of the public, consider designing suitable posters or pamphlets
or flyers or notices containing following messages:
Never respond to unsolicited offers of money received through emails/phone/
other media*
No one really gives you money for free*
Be careful while investing in seemingly attractive schemes offering high returns *
Don’t invest in unregulated companies/entities*
Don’t rely on hearsay - Check for yourself*
High return means higher risk including potential loss of entire money – Check your
risk-appetite! *
Take care of your money – it is hard to earn but easy to lose*
When in doubt check with a trusted financial adviser*
*For any clarification, visit www.rbi.org.in or www.sebi.gov.in or www.irda.gov.in
Wherever feasible, such messages may be displayed or distributed in the bank
branches (in the official language of the state) to enable easy notice by the
customers. Since bank branches are vantage points where members of public visit, it
will help to disseminate the information to the public. Banks may consider places like
Automated Teller Machines or Business Correspondent Points where such
messages could get wider visibility. This would also be beneficial to the bank as their
customers would be aware and vigilant of any such fraudulent schemes/calls.RBI,DBR,CO - 3 - continuation sheet
6. It needs to be emphasised that to be effective such measures have to be pursued
continuously for a long period of time and therefore the field staff may be sensitised
in this regard. The branch officials should also be encouraged to share any
meaningful information (market intelligence) of any such dubious scheme in their
area with their Regional Offices, which may, in turn, share such information with
concerned Regional Office of RBI.
7. We are also sending a copy of the circular to Indian Banks’ Association to
consider developing a common design for the above messages which individual
banks may consider adopting/ printing and then displaying or distributing.
Yours faithfully
(Rajinder Kumar)
Chief General Manager