India lost at least Rs 100 crore every day to bank fraud or scams over the past seven years, although there was a year-on-year reduction in the total amount involved, according to RBI data.
Maharashtra, which houses the country’s financial capital, topped the table, accounting for 50% of the money involved, followed by Delhi, Telangana, Gujarat and Tamil Nadu. These five states together accounted for more than Rs 2 lakh crore, or 83%, of the quantum of money lost to financial fraud, the report said. Between April 1, 2015 and December 31 last year, banking fraud worth Rs 2. 5 lakh crore was detected across states.
The finance ministry, however, said measures put in place for prompt reporting and prevention had led to incidence of fraud decrease year on year.
RBI classifies frauds under eight categories: misappropriation and criminal breach of trust; fraudulent encashment through forged instruments, manipulation of books of account or through fictitious accounts and conversion of property; unauthorised credit facilities extended for reward or for illegal gratification; negligence and cash shortages; cheating and forgery; irregularities in foreign exchange transactions and any other type of fraud not coming under the specific heads as above. A break-up under each of these categories wasn’t immediately available.
Sanjay Kaushik, managing director of Netrika Consulting, whose clientele include banks, said while banks spend a lot of time looking outside their walls for fraud, it would be effective if they made insiders more accountable, especially while dealing with large advances and loans.
“There must be a process that assigns responsibility and make those sanctioning such loans accountable as a lot of these frauds happen because advances or loans have been provided without collaterals,” Kaushik said.
Bikash Gangadharan, a senior manager with an MNC bank, said that even in cases where banks had collateral, no proper risk assessment was carried out. “In US banks, for instance, risk assessment of loans or advances is done regularly, every day in some cases. This does not happen in Indian banks and I think putting in place dedicated teams for this could go a long way in identifying loans that could go bad early and therefore, act before the money is lost,” he said.
Y Sudarshan, former president, All India Bank Officers Confederation, said the rate of fraud was declining because of a lot of measures being put in place to not just punish those indulging in financial malpractice, but also to prevent it.
According to a finance ministry statement, “improved detection and reporting, including legacy stock of NPAs, accompanied with comprehensive steps taken to check frauds have resulted in a sharp decline in occurrence”.
From Rs 67,760 crore in 2015-16, the quantum of money lost to fraud dipped to Rs 59,966.4 crore in 2016-17. The two years that followed reported under Rs 45,000 crore. In 2019-20, the number further dropped to Rs 27,698.4 crore and then to Rs 10,699.9 crore in 2020-21. The amount in the first nine months of this fiscal stands at Rs 647.9 crore.
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