Indian banks report loan fraud worth Rs 5 billion, highest amount in SBI
Banks operating in India reported fraud of 4.92 trillion rupees as of March 31, 2021, which represents nearly 4.5% of total bank lending, data from the Reserve Bank of India (RBI) showed, which were wanted under the Right to Information Act (RTI). by Saurabh Pandhare.
Data showed that 90 banks and financial institutions reported a total of 45,613 cases of loan fraud through March 31, 2021.
The State Bank of India – the largest lender in the country – reported the highest amount of loans as fraud – Rs 78,072 crore as of March 31, 2021. SBI is followed by the Punjab National Bank (Rs 39,733 crore), Bank of India (Rs 32,224 crore) and Union Bank of India (Rs 29,572 crore).
“Bank fraud data from banks that merged with other banks later (like Andhra Bank, Corporation Bank, etc.) is provided as reported by each bank during the period the bank was operational,” said RBI in the RTI report. .
The top five banks account for 42.1% or Rs 2.06,941 crore of the total fraud classified by banks.
Among private sector banks, ICICI Bank led the amount of loan fraud (5.3%), followed by Yes Bank (4.02%) and Axis Bank (2.54%). These three private sector banks accounted for 11.87% of the total amount involved in loan fraud. The amount of the largest private sector lender HDFC Bank involved in loan fraud was 0.55% of the total.
RBI standards require banks to fund 100% of the total amount that has been qualified as fraud.
In 2019-2020, the Indian banking sector recorded a 159% jump in questionable transactions to Rs 1.86 trillion according to the RBI annual report. The data, which concerns frauds above Rs 1 lakh, shows that the number of frauds increased by 28% to 8,707 in FY20 from 6,799 in the previous fiscal year. There was a focus on high value frauds, with the top 50 credit accounts contributing 76% of reported frauds in 2019-2020.
Between 2014-2015 and 2019-2020, banks reported fraud worth 3.6 trillion rupees, according to RBI data.
RBI data for fiscal years 20 and 19 showed an overwhelming number of loan frauds. Advance fraud was 90.2% in FY19 and 98.1% in FY20, respectively. Fraud related to off-balance sheet items, deposits and the Internet represent a tiny proportion of credit fraud. This means that most of the frauds were committed by borrowers.
One of the reasons for the sharp increase in the number of reported frauds in recent years is a government directive released in February 2018, bankers said.
The directive, issued by the Ministry of Finance, mandated lenders to probe all non-performing accounts of Rs 50 crore and more for possible fraud and report it to the Central Bureau of Investigation (CBI). This is one of the main reasons why fraud reporting has increased since 2018-2019. Banks are becoming proactive in reporting fraud, even if a process is followed, such as performing forensic audits before fraud is reported.
Data obtained by the same RTI app showed that 2,261 accounts had been identified by banks as willful defaulters as of December 31, 2020, for a total amount of Rs 1.72 trillion. Sequentially, the amount of voluntary default is up 4.5% from the end of September, or 1.64 trillion rupees.
A total of 147 new voluntary defaults were identified by lenders during the October-December quarter. These lenders owed the banks 5,785.93 crore rupees.