Govt banks report 13 fraud cases over Rs 500 cr

Govt banks report 13 fraud cases over Rs 500 cr

NEW DELHI [Maha Media]: The number of bank fraud cases of Rs 500 crore or higher, reported by public sector banks or financial institutions, till June 2021 stood at 13, said the Ministry of Finance citing information from the Reserve Bank of India (RBI). These cases amounted to 79 in 2019-20 and 73  in 2020-21.

The information was given by the Union Minister of State for Finance Dr Bhagwat Kisnrao Karad in a written reply in Rajya Sabha on Tuesday, July 28.

The Minister further stated that frauds, as per RBI, included methods such as a fraudulent discount of instruments, fraudulent disposal of pledged or hypothecated stocks, fund diversion, criminal neglect and mala fide managerial failure on the part of borrowers. Other methods, which include forged instruments, manipulated account books, fictitious accounts, unauthorized credit facilities, fraudulent foreign exchange transactions, exploitation of ‘multiple banking arrangement’, and deficiency on the part of third parties with role in credit sanction/disbursement.

Minister Karad also reiterated the steps taken by the government to curb the incidence of frauds in banks. He said the government has issued ‘Framework for timely detection, reporting, investigation etc. relating to large value bank frauds’ to public sector banks (PSBs), for systemic and comprehensive checking of legacy stock of their non-performing assets (NPAs) which dictates that all accounts exceeding Rs 50 crore, if classified as NPAs, be examined by banks from the angle of possible fraud, and a report placed before the bank’s Committee for Review of NPAs on the findings of this investigation. Such an examination will be initiated for wilful default immediately upon reporting fraud to RBI and report on the borrower be sought from the Central Economic Intelligence Bureau in case an account turns NPA.

Also, Fugitive Economic Offenders Act, 2018 has been enacted to deter economic offenders from evading the process of law by remaining outside the jurisdiction of Indian courts. The act provides for attachment of property of a fugitive economic offender, confiscation of such offender’s property and disentitlement of the offender from defending any civil claim.

The government also advised PSBs to obtain a certified copy of the passport of the promoters, directors and other authorised signatories of companies availing loan facilities of more than Rs 50 crore and, decide on publishing photographs of wilful defaulters, in terms of RBI’s instructions and as per their board-approved policy and to strictly ensure rotational transfer of officials/employees. The heads of PSBs have also been empowered to issue requests for issue of Look Out circulars.

For enforcement of auditing standards and ensuring the quality of audits, the government has established the National Financial Reporting Authority as an independent regulator.

Instructions, advisories have been issued by the government to PSBs to decide on publishing photographs of wilful defaulters, in terms of RBI’s instructions and as per their Board-approved policy, and to obtain a certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs 50 crore.
 

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