Bank frauds worth Rs 71,500 crore detected in FY19 states RBI report
Among bank groups, public sector banks (PSBs), which constitute the largest market share in bank lending, have accounted for the bulk of frauds reported in 2018-19. It was followed by private sector banks and foreign banks
The number of cases of frauds reported by banks saw a jump of 15 per cent year-on-year basis in 2018-19, with the amount involved increasing by 73.8 per cent in the year, RBI’s annual report showed.
In FY19, banking sector reported 6,801 frauds involving Rs 71,542.93 crore as against 5,916 cases involving Rs 41,167.04 crore reported in 2017-18.
Among bank groups, public sector banks (PSBs), which constitute the largest market share in bank lending, have accounted for the bulk of frauds reported in 2018-19. It was followed by private sector banks and foreign banks.
In the reporting year, state-run banks reported 3,766 cases of frauds worth Rs 64,509.43 crore as against 2,885 cases involving Rs 38,260.8 crore in the preceding financial year (FY).
The report said that the average lag between the date of occurrence and its detection by banks was 22 months. “The average lag for large frauds, ie Rs 100 crore and above, amounting to Rs 52,200 crore reported during 2018-19, was 55 months,” the report said.
In terms of area of operations, frauds related to advances constituted the preponderant share of the total amount involved in frauds in 2018-19, while the share of frauds in off-balance sheet items declined from a year ago.
Number of frauds related to advances is predominant followed by card/internet-related frauds and deposits-related frauds, the report said.
Cheating and forgery was the major component, followed by misappropriation and criminal breach of trust. Fraud cases involving an amount of less than 1,00,000 (ie, small value frauds) were only 0.1 per cent of the total amount involved in 2018-19, the report said.
RBI said it would coordinate with various agencies including the Ministry of Corporate Affairs to examine the feasibility of interlinking various databases and information systems to improve the system of fraud monitoring and take necessary corrective regulatory and supervisory action.
To improve the fraud risk management framework for banks, the apex bank will revise the master directions on frauds to incorporate new instructions in the light of experience gained. Workshops will be conducted for the bankers based on comprehensive reviews, to sensitise them on fraud prevention, prompt/ accurate reporting and follow up action.
Fraud registry will be made more user-friendly and fraud analytics will also be improved, the report said.