In its 44th report, the committee said there was a need to strengthen internal inspection as this has led to an increasing incidence of economic offences leading to considerable draining of national resources.

"Every year crores of rupees are siphoned out of banks by unscrupulous persons both within banks and outside", largely due to inadequate controls, it said.

The committee felt the auditor should be imparted necessary training to strengthen preventive vigilance measures and that internal and external concurrent audit should be imposed on all banks.

Regular supervision by audit committees headed by chartered accountants from outside circles should be made obligatory, it said and recommended all advances and loans should be made within a timeframe by a committee in each branch of every bank.

The report said such committees should meet within a week or ten days. This system was working well in the Export-Import Bank of India. It said that all such advances and loans should be brought under a concurrent audit system.

The government assurances committee also called for evolving a system that identifies loopholes prevailing in banks and plug them to prevent any fraud.

It said about 50 per cent of frauds detected so far have been perpetrated with connivance of bank officials or by bank officials themselves.

The bank management should identify areas which are sensitive and officials with doubtful integrity should not be posted in such areas.

Besides, employees should be rotated from desk to desk at regular intervals in each branch of every bank.

For honest and sincere officials who help in detection of frauds, schemes should be evolved to provide monetary incentives and explore possibility of bringing cent per cent audit of banks underthe comptroller and auditorgeneral of India or some independent audit commission.