The Central Bureau of Investigation (CBI) said it is enhancing its capacity to curb banking fraud in the country as the situation on bad debts or non-performing assets (NPAs) is becoming ‘grim.’ “We will be adding to the units that we have, such as the banking security and fraud cell. We will not only upgrade our capacity, but also set up new units, as we have in some metropolitan cities, and add more branches,” CBI Director Anil Kumar Sinha told BusinessLine on the sidelines of the Conference of Chief Vigilance Officers of Public Sector Banks and Financial Institutions here on Friday.
To augment the capabilities of investigators and prosecutors, the first batch of 30 CBI officers will begin training in handling advanced financial crimes from July 27 at IIM Bangalore. These are among 185 officers to be trained at this IIM and National Law School during this year. The CBI is also in the process of setting up a centralised technology vertical to support investigations in areas of cyber forensics, mobile forensics and forensic fraud examination.
Bad debts or NPAs rose to ₹2.22 lakh crore in 2014 from ₹45,000 crore in 2009. In percentage terms (of gross advances), the NPAs have grown to 3.8 per cent in 2014 from 2 per cent in 2009. “If we add to the NPAs, the poorly performing restructured loan accounts and other sub-standard assets, the situation becomes more grim,” Sinha said in his address.
He said while the NPAs were growing since the past five years, there was under-reporting of frauds for a variety of reasons linked to the larger issue of corporate governance in banks. ‘Deliberate undue accommodation in big ticket lendings’ was also found.
Later, terming fraud in the financial sector as a ‘lethal parasite,’ Minister of State for Finance Jayant Sinha said 65 per cent of the total fraud cases reported by banks were technology-related frauds (committed through/at internet banking channel, ATMs and payment channels like credit/ debit/pre-paid cards) while the advances portfolio accounted for a major proportion (64 per cent) of the total amount involved in frauds.
He said the RBI is in the process of designing a Central Fraud Registry, where banks would be able to access key details of previous frauds. “The creation of such a database at the RBI will make available more information to banks at the time of the start of a banking relationship, extension of credit facilities or at any time during the operation of an account,” he said, adding that the CBI and the Central Economic Intelligence Bureau have also expressed interest in sharing their own databases with banks.