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There has been a jump in the quantum of funds involved in frauds in banks and other financial institutions during the year 2017-18.
As per data submitted by the Reserve Bank of India (RBI) to the Centre, the amount increased to ₹32,048 crore in the last financial year against ₹23,930 crore in the previous year.
For public sector banks, it had gone up significantly from ₹19,529 crore to ₹29,246 crore. Nationalised banks witnessed a steep increase in this regard.
This increase is noteworthy as it could not be prevented despite a directive to public sector banks to ensue a framework for timely detection of frauds.
For SBI, there was a decrease in the amount involved, though the number of reported frauds had gone up. It came down to ₹254,198 lakh from ₹303,642 lakh in the previous year. The number of frauds, however, had gone up to 981 from 794.
Private sector banks had also witnessed a decrease in the amount involved in frauds.
Apparently, banks became victims of high-profile customers, as the number of frauds were 2,883 against 2,709 in the financial year 2016-17.
A look into the last five years’ data reveals that there has been a three-fold increase in public money that was lost. For instance, in 2013-14, the amount involved was ₹10,170 crore, and the number of reported frauds were only 4,306.
The RBI had, in February 2018, constituted a panel under the chairmanship of YH Malegam to look into factors that contribute to the increase in the number of frauds. It has also been asked to come up with measures to prevent frauds.
The Central Vigilance Commission (CVC) has analysed 17 large-value accounts across seven different sectors – gem and jewellery, manufacturing/industry, agro, media, aviation, service/projects and discounting of cheques.
In case of accounts classified as non-performing assets, banks have also been told to initiate staff accountability exercise within six months from the date of reporting. The outcome should be placed before the special committee of the board for monitoring and follow-up of frauds.
When contacted, an executive director of a public sector bank told BusinessLine that the increase was due to stringent investigations being undertaken by banks on corporate and other advances, and is likely to be under control over the next couple of years.
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