Finance Minister Arun Jaitley on Thursday asked public sector banks to improve their risk management systems further. The minister’s advice is significant as it comes at a time when the banking system is facing challenges of bad loans and increasing incidents of fraud.

Jaitley also said that the government would soon initiate steps to tighten risk management in the banking sector.

“Some recent events are disturbing. I hope it will only be a drop in the ocean and we have all learnt the lessons from such incidents and there will be no repetition of them,” Jaitley said at the 108th foundation day event of Indian Bank here.

He said “credibility” was extremely important as far as functioning of the banking system was concerned. “Banks must endeavour to continuously improve standards of credibility,” he added.

It was only the attribute of conservatism and professionalism that had helped the Indian banking system survive the sub-prime crisis that hit the developed world in 2007-08, he said. On the occasion, Jaitley inaugurated 108 branches and 108 ATMs of Indian Bank.

Corporate defaulters Data available with the Finance Ministry showed that 30 companies together owed ₹16,877 crore as on end-September 2013 to public sector banks. The defaulters include Kingfisher Airlines, Zoom Developers, Winsome and Sterling Biotech, among others.

Of late, the Finance Ministry has resorted to forensic audits in cases of alleged frauds perpetrated on the banking system.

The latest instance of ordering forensic audits is in the case of Oriental Bank of Commerce and Dena Bank, where misappropriations of about ₹437 crore have come to light.

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