India’s state-run banks reported fraud to the tune of 958 billion rupees ($13.3 billion) in the first six months of the financial year, from April to September 2019, Finance Minister Nirmala Sitharaman said on Tuesday, November 19.
As per the RBI, there were around 6,800 cases of bank fraud involving Rs 71,500 crore in 2018-19.
“State-run banks reported 5,743 cases of fraud, most of which took place over the last several years, although 1,000 cases worth ₹2,500 crores had just taken place,” Nirmala Sitharaman told the Rajya Sabha.
“Government has taken comprehensive measures to curb the incidence of fraud in banks,” Sitharaman said.
These measures include freezing of 338,000 bank accounts of non-functioning companies in the last two financial years and the enactment of a law that allows the confiscating property of those found to have committed fraud or fled the country.
State Bank of India reported fraud of ₹25,400 crores followed by Punjab National Bank of ₹10,800 crore and Bank of Baroda of ₹8,300 crores, Sitharaman said. Bankers have accused lax regulations and said that some bank officials were associated with fraudsters.
Punjab National Bank also reported more than $2 billion losses last year alleging that a few rogue employees had issued fake bank guarantees over the years to help jewellery groups raise funds in foreign credit.
After the Rs 13,000 crore bank fraud involving Punjab National Bank, Nirav Modi and Mehul Choksi came to light in 2019, the central government instructed the CBI to take stringent action against the fraudulent banks.
Prime Minister Narendra Modi introduced a stringent bankruptcy and insolvency law in 2016, and a fugitive economic offenders law to help banks recover losses from fraud.
In October, RBI Governor Shaktikanta Das came under pressure at the apex banks’ board meet as two external directors questioned the RBI over series of scams that remained unnoticed since 2018.
The Central Bureau of Investigation (CBI) on November 5, conducted searches across 169 locations in the country in connection with various bank frauds amounting to over Rs 7,000 crore. The raids primarily targetted nationalised banks.