{"id":17659,"date":"2020-08-26T12:27:29","date_gmt":"2020-08-26T12:27:29","guid":{"rendered":"https:\/\/bengalnewstimes.com\/?p=17659"},"modified":"2020-08-26T12:27:29","modified_gmt":"2020-08-26T12:27:29","slug":"banking-fraud-jumps-159-yoy-shows-rbi-report-bfsi-news-et-bfsi","status":"publish","type":"post","link":"https:\/\/bengalnewstimes.com\/?p=17659","title":{"rendered":"Banking fraud jumps 159% YoY, shows RBI report, BFSI News, ET BFSI"},"content":{"rendered":"

<\/p>\n

According to the Annual report<\/a> of the Reserve Bank of India<\/a> (RBI<\/a>), the total number of fraud cases<\/a> (involving Rs 1 lakh and above) reported by banks and financial institutions have increased by 28% by volume and 159% by value during 2019-2020. The report stated that there were 6,799 fraud cases amounting to Rs 71,543 crore as of March 2019, but the number of frauds soared to 8,707, amounting to Rs 1,85,644 crore by March 2020. <\/p>\n

According to RBI, the frauds registered during 2019-20 actually occurred in previous years. The average time difference between the date of fraud occurrence and the detection of fraud by banks and financial institutions is 24 months. In large-scale frauds (i.e. Rs 100 crore and above), the average lag time is 63 months. In many such accounts, sanctions on credit facilities were much older.<\/p>\n

The report said the fraud occurred majorly in the loan portfolio (advances), involving 4,610 cases with a value of Rs 1,82,051 crore, accounting for 98.1% of the total amount of fraud. Public sector banks reported 4413 cases amounting to Rs 1,48,400 crore and Private banks reported 3,066 fraud cases amounting to Rs 34,211 crore. <\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n <\/td>\n2019-2020<\/strong><\/td>\n2018-2019<\/strong><\/td>\n<\/tr>\n
Banks and Groups <\/strong><\/td>\n <\/td>\nNumber of frauds<\/strong><\/td>\nAmount Involved (in crores)<\/strong><\/td>\nNumber of frauds<\/strong><\/td>\nAmount Involved (in crores)<\/strong><\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Public Sector Banks<\/td>\n <\/td>\n4,413<\/td>\n1,48,400<\/td>\n3,568<\/td>\n63,283<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Private Sector Banks <\/td>\n <\/td>\n3,066<\/td>\n34,211<\/td>\n2,286<\/td>\n6,742<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Forigen Banks<\/td>\n <\/td>\n1026<\/td>\n972<\/td>\n762<\/td>\n955<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Financial Institutions<\/td>\n <\/td>\n15<\/td>\n2,048<\/td>\n28<\/td>\n553<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Small Finance Banks<\/td>\n <\/td>\n147<\/td>\n11<\/td>\n115<\/td>\n8<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Payments Banks<\/td>\n <\/td>\n38<\/td>\n2<\/td>\n39<\/td>\n2<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Local Area Banks<\/td>\n <\/td>\n2<\/td>\n0.43<\/td>\n1<\/td>\n0.02<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Total<\/strong><\/td>\n <\/td>\n 8,707 <\/td>\n 185,644 <\/td>\n 6,799 <\/td>\n 71,543 <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

“There was a concentration of large value frauds, with the top fifty credit-related frauds constituting 76% of the total amount reported as frauds during 2019-20\u201d, the report said. <\/p>\n

The report explains that the banks\u2019 ineffective implementation of the early warning signal (EWS<\/a>), no early warning signal found in the internal audit<\/a> process, lack of cooperation from the borrower during the judicial appraisal process, inconclusive audit reports and lack of decision-making ability in the joint lender meeting led to delays in the detection of frauds.<\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n <\/td>\n2019-2020<\/strong><\/td>\n2018-2019<\/strong><\/td>\n<\/tr>\n
Area of Operation<\/strong><\/td>\n <\/td>\nNumber of frauds<\/strong><\/td>\nAmount Involved (in crores)<\/strong><\/td>\nNumber of frauds<\/strong><\/td>\nAmount Involved (in crores)<\/strong><\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Advances<\/td>\n <\/td>\n4,610<\/td>\n1,82,051<\/td>\n3,604<\/td>\n64,548<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Off-balance Sheets<\/td>\n <\/td>\n34<\/td>\n2445<\/td>\n33<\/td>\n5538<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Forex Transactions<\/td>\n <\/td>\n8<\/td>\n54<\/td>\n13<\/td>\n695<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Card\/Internet<\/td>\n <\/td>\n2,678<\/td>\n195<\/td>\n1,866<\/td>\n71<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Deposits<\/td>\n <\/td>\n530<\/td>\n616<\/td>\n593<\/td>\n148<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Inter Branch Accounts<\/td>\n <\/td>\n2<\/td>\n0<\/td>\n3<\/td>\n0<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Cash<\/td>\n <\/td>\n371<\/td>\n63<\/td>\n274<\/td>\n56<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Cheques\/DDs etc.<\/td>\n <\/td>\n202<\/td>\n39<\/td>\n189<\/td>\n34<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Others<\/td>\n <\/td>\n250<\/td>\n174<\/td>\n200<\/td>\n244<\/td>\n<\/tr>\n
<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Total<\/strong><\/td>\n <\/td>\n 8,707 <\/td>\n 185,644 <\/td>\n 6,799 <\/td>\n 71,543 <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

To tackle this problem, the report stated that the EWS mechanism is being improved, while concurrent audit functions have been strengthened, and timely and conclusive forensic audits have been conducted on borrower accounts. Regulators have negotiated with the Central Vigilance Committee<\/a> (CVC) to establish the Bank Fraud Advisory Committee (ABBF).<\/p>\n

RBI has also established an analysis committee composed of well-known experts from IITs, IIMs, ISI, and IDRBT to engage in adopting industry standards in SupTech, which would provide improved supervision by applying business intelligence and data analytics for risk modeling.<\/p>\n<\/div>\n