Banks lost Rs 41,167 crore to fraud in 2017-18 - RBI
PrintListen to this Article
There were 5,917 instances of bank fraud in 2017-18 as against 5,076 cases the previous year, show the data released Friday. The instances of fraud have been rising over the last four years — by four times from Rs 10,170 crore in 2013-14.
In 2017-18, however, frauds related to off-balance sheet operations, foreign exchange transactions, deposit accounts and cyber-activity took centrestage. Banks reported more cyber frauds during the year, losing Rs 109.6 crore in 2,059 cases in 2017-18 as against Rs 42.3 crore with 1,372 cases the previous year.
Large-value frauds involving Rs 50 crore and above constituted about 80 per cent of all the frauds reported this year. Significantly, 93 per cent of fraud cases worth more than Rs 1 lakh occurred in PSU banks while private banks accounted for six per cent.
The increasing number of frauds has contributed to the ballooning bad loans, which were at Rs 10,39,700 crore as of March 2018.
The jump in 2017-18 was primarily due to the over Rs 13,000-crore Punjab National Bank (PNB) case, involving fugitive businessmen Nirav Modi and Mehul Choksi. “In terms of amount, frauds in the banking sector increased sharply in 2017-18, mainly reflecting a large value case in the jewellery sector,” the RBI said.
The central bank has admitted that “frauds have emerged as the most serious concern in the management of operational risk, with 90 per cent of them located in the credit portfolio of banks”.
According to the central bank, the modus operandi of large-value frauds involves opening current accounts outside the lending consortium without a no-objection certificate from lenders, deficient and fraudulent services/ certification by third-party entities, diversion of funds by borrowers through various means, including through associated/ shell companies, lapses in credit underwriting standards and failure to identify early warning signals.
In February 2018, the RBI advised the Indian Banks Association (IBA) to initiate action to put in place enhanced IT-enabled, user-friendly, web-based TPE reporting and disseminating infrastructure with suitable data security and control measures.
Moreover, in view of the cases relating to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, including the PNB case, the RBI directed banks to strengthen various operational controls in a time-bound manner.
An expert committee, headed by Y H Malegam, was formed in February 2018 to examine asset classification and provisioning practices of banks and the incidence of frauds.#casansaar (Source - IndianExpress)
Category : RBI | Comments : 0 | Hits : 400
RBI has issued draft rules to tighten dividend payouts by banks by linking distributions to capital adequacy, asset and profit quality, setting a uniform prudential framework effective from FY27. In the previous financial year, banks paid over Rs 75,000 crore dividend after booking record profits. Under RBI's draft rules, dividend payments by banks will be governed by a common set of conditions from FY27. The directions apply to all banking companies, corresponding new banks and SBI, and ...
Listing of an Indian company on international stock exchanges got a push with the Reserve Bank of India (RBI) coming out with regulations under Foreign Exchange Management (FEMA). Experts believe new regulations will help companies utilise foreign exchange more effectively. Regulations have been made public through two notifications. First set of regulations deals with mode of payment and reporting of non-debt instruments. “The proceeds of purchase / subscription of equity shares of an ...
The Lok Sabha elections 2024 are in full swing with electioneering adding much colour to the entire process. However, to ensure that there is no wrongdoing, the Reserve Bank of India (RBI) has sent a missive to Payment System Operators (PSOs) asking them to keep a watch on all suspicious high-value transactions that they may come across in their systems. The general purpose of the letter is to deny the use of electronic fund transfer mechanism to anyone who is intending to influence the election...
he Reserve Bank on Tuesday came out with draft guidelines to further strengthen regulations on payment aggregators, a move aimed at boosting the payment ecosystem. The draft also covers the physical point-of-sale activities of payment aggregators (PAs). The RBI said that given the growth in digital transactions and the significant role that PAs play in this space, the current directions on PAs are proposed to be updated and cover, inter alia, KYC and due diligence of merchants, operations ...
The RBI on Monday eased rules to allow resident entities to hedge their exposures to the price risk of gold using the OTC derivatives in the International Financial Services Centre (IFSC) in addition to the derivatives on the exchanges in the IFSC. Resident entities such as banks were permitted to hedge their exposure to the price risk of gold on the exchanges in the IFSC that are recognised by the International Financial Services Centres Authority (IFSCA), and the new directive provides them...
Comments