Chennai: In the last four years, there has been a four-fold increase in the quantum of money swindled by fraudsters from banks, the Reserve Bank said.
In its Financial Stability Report the RBI said, looking at the progress in the first half of the ongoing fiscal, the pace of frauds seems to be continuing on the upward trajectory.
The apex bank said 5,917 frauds involving an amount of Rs 41,167 crore were reported by the banks in fiscal year 2017-18, as against 4,306 frauds entailing an amount of Rs 10,170 crore in FY14.
The graph of both the frauds as well as the amount involved has been on the rise steadily through the four years till FY18, which coincides with the government change at the Centre, the report said.
The only exception was in fiscal year 2015-16, which saw a dip in the total amount involved as compared to the previous fiscal, even as the number of frauds rose marginally, it stated.
In the government’s full final fiscal in office, the trend of a rise in frauds seems to be continuing, with 3,416 frauds involving an amount of Rs 30,420 crore being reported.
On an annualised basis, it is higher than the previous fiscal’s 5,917 frauds involving an amount of 41,167 crore.
There has been a huge jump in credit related frauds in the first half of the current fiscal, the RBI report said, pointing out that they now constitute 94.51 per cent of the overall amount as against 54.8 per cent in the previous fiscal and 82.71 per cent in fiscal year 2013-14.
There has been a marked increase in the number of large frauds involving amounts of over Rs 50 crore, it said, and added that the State-run lenders continue to be a major victim of fraud-related cases.
The FSR said the share of the 11 State-run banks under the prompt corrective action (PCA) framework was more than their share of the risk-weighted assets, at 36.5 per cent of the overall frauds as against under 19 per cent share in operational risk going by risk weighted assets.
“A more judicious alignment of realised operational risk with allocated capital, specifically with regards to PCA-PSBs, is desirable,” the report said.
It recommended a ringside assessment of efficacy of audit framework (both internal and external), the internal governance framework, with regard to accountability and credit screening/oversight for the state-run lenders.
| Govt wanted PCA norms relaxed |
| Even as the government, on the insistence of public sector banks (PSBs), wanted the prompt corrective action (PCA) norms relaxed, the strict norms have helped reduce contagion losses incurred by the banking system in case of PCA banks failure, the Reserve Bank of India (RBI) said.
The government and the RBI locked horns over PCA framework among other issues. The RBI held that 11 PSBs should continue to remain under the close watch of the central bank until their financial health improves, while the government wanted the norms to be relaxed so that some banks could start lending again. “Lending and other restrictions imposed on PCA banks under the PCA framework have led to a reduced impact on the system through connectivity. This has reduced the contagion losses incurred by the banking system in case of PCA banks failure,” the RBI said. PCA was introduced by Raghuram Rajan but rules were revised in April 2017 under Urjit Patel. Since July 2017, 11 PSU banks have come under its ambit. Under the PCA, the RBI can impose several restrictions on extending fresh loans and dividend distribution. Interestingly, restrictions have been imposed on a case-to-case basis. |