Lok Sabha Question No. 3596 (UNSTARRED), answered on 2018-03-16
Subject: RBI Audit of Loan Exposure of Banks
Ministry: FINANCE
Asked by: RAKESH SINGH, N.K. PREMACHANDRAN

## GOVERNMENT  OF INDIA

## LOK SABHA

## MINISTRY OF FINANCE DEPARTMENT  OF FINANCIAL  SERVICES

## UNSTARRED QUESTION NO. †3596

TO BE ANSWERED  ON THE 16 TH  MARCH 2018/ PHALGUNA 25, 1939 (SAKA)

## RBI Audit  of Loan Exposure of Banks

## †3596.  SHRI RAKESH  SINGH: SHRI N.K.  PREMACHANDRAN:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether   the  Government   proposes  to  conduct   an  inspection   audit   in  all  State-owned banks in the light  of scams reported  from various  banks  and if so, the details  of the action  taken thereon;
- (b) the details  of the scams in the banks  during  the last three  years;
- (c) whether  the Government  proposes to establish  a scheme for audit  by  the Reserve  Bank of India with  regard  to the loans  and over  drafts availed  amounts of  more than  ten crores;
- (d) if so, the  details  thereof  and if not,  the reasons therefor; and
- (e) whether  the Government  initiated  action  against  the accused in bank  scams and if so, the details  thereof  for the last three  years?

## ANSWER

The Minister  of State in the Ministry  of Finance (SHRI SHIV PRATAP  SHUKLA)

- (b):As reported  by  RBI, details  of frauds in banks  during  the last three  financial  years are at Annex-1.
- (a):   Audit  of banks  is governed  by  the provisions  of section  30 of the Banking  Regulation Act,  1949. In addition,  audit  of nationalised  banks  is governed  by  the provisions  of section  10 of the Banking  Companies  (Acquisition  & Transfer  of Undertakings) Acts of 1970 and 1980, while  that  of the State Bank  of India (SBI) is governed  by  the provisions  of section  41 of the State Bank of India Act,  1955. As per the provisions  of section  30 of the Banking  Regulation Act,   previous   approval   of  Reserve   Bank of  India  (RBI)  is  required   for  appointment of auditors  for conducting  annual  audit,  which  is referred  to as statutory audit.  Further,  section 35 of the Banking  Regulation  Act provides  that  RBI may  inspect  any  banking  company  and its books  and accounts,  and RBI carries  out Annual  Financial  Inspection  of Banks under  this. Thus,  statutory  audit  with  RBI's approval  and Annual  Financial  Inspection  of Banks  by  RBI are a statutory  feature  and are carried  out accordingly, including  in respect of Public  Sector Banks (PSBs).
- (c) and (d): No proposal  for establishing  a scheme for audit  by  RBI with  regard  to loans and overdrafts   of  amounts  of  more  than  Rs.  10  crore   is  currently under  consideration. Government  has asked PSBs to examine  all accounts  exceeding  Rs. 50 crore,  if classified  as Non-Performing  Assets (NPA), from the angle  of possible  fraud.
- (e): As reported  by  PSBs, details  of action  initiated  in respect  of frauds  in banks  are at  Annex-2.

## Frauds reported  during  FY 2014-15  to FY 2016-17

|                                          | 2014-15       | 2014-15                     | 2015-16       | 2015-16                     | 2016-17       | 2016-17                    |
|------------------------------------------|---------------|-----------------------------|---------------|-----------------------------|---------------|----------------------------|
| Bank                                     | No. of frauds | Amount involved in lakh Rs. | No. of frauds | Amount involved in lakh Rs. | No. of frauds | Amount involvedin lakh Rs. |
| AbuDhabiCommercialBank PJSC              | 0             | 6.91                        | 1             | 2488.94                     | 0             | 0                          |
| AllahabadBank                            | 47            | 7597.64                     | 23            | 29090.8                     | 60            | 89508.67                   |
| AmericanExpress BankingCorp.             | 176           | 1007.51                     | 187           | 641.83                      | 166           | 558.54                     |
| Andhra Bank                              | 52            | 51148.11                    | 44            | 25045.92                    | 64            | 24560.11                   |
| AxisBank Ltd.                            | 187           | 33713.54                    | 227           | 33836.39                    | 222           | 202037.9                   |
| BandhanBank Ltd.                         | 0             | 0                           | 1             | 11.55                       | 13            | 155.56                     |
| Bank ofBahrain&KuwaitBSC                 | 0             | 0                           | 0             | 0                           | 1             | 6.97                       |
| Bank ofBaroda                            | 303           | 122602.4                    | 255           | 166810                      | 224           | 116484.7                   |
| Bank ofIndia                             | 131           | 9244.37                     | 156           | 121757.56                   | 162           | 277400.7                   |
| Bank ofMaharashtra                       | 50            | 23905.6                     | 45            | 130773.15                   | 75            | 42502.25                   |
| Bank ofNovaScotia                        | 0             | 0                           | 0             | 0                           | 1             | 13                         |
| BharatiyaMahilaBank Ltd.                 | 0             | 0                           | 0             | 0                           | 4             | 54.77                      |
| CanaraBank                               | 114           | 17563.19                    | 94            | 158977.98                   | 119           | 61016.51                   |
| CapitalSmallFinanceBank                  | 2             | 18.2                        | 0             | 0                           | 0             | 0                          |
| CatholicSyrianBank Ltd.                  | 8             | 179.45                      | 11            | 917.09                      | 39            | 2044.79                    |
| CentralBank ofIndia                      | 214           | 214971.8                    | 167           | 17729.55                    | 146           | 86786.13                   |
| CitibankN.A.                             | 94            | 848.88                      | 115           | 510.51                      | 177           | 1171.58                    |
| CityUnionBank Ltd.                       | 2             | 644.19                      | 5             | 1208.67                     | 3             | 2303.36                    |
| Corporation Bank                         | 73            | 122209.3                    | 135           | 132199.37                   | 83            | 69407.57                   |
| CTBC Bank                                | 3             | 11165.25                    | 1             | 2000                        | 0             | 0                          |
| DBS Bank Limited                         | 3             | 3442.4                      | 3             | 7111.53                     | 1             | 8.19                       |
| DCBBank Ltd                              | 2             | 4.08                        | 14            | 459.35                      | 0             | 0                          |
| DenaBank                                 | 41            | 40015.93                    | 21            | 7102.43                     | 43            | 46809.33                   |
| DeutscheBank (Asia)                      | 2             | 15.25                       | 1             | 1.5                         | 1             | 6.17                       |
| DhanlaxmiBank Limited                    | 7             | 7284.13                     | 4             | 556.12                      | 6             | 9085.09                    |
| DohaBankQsc                              | 0             | 0                           | 0             | 0                           | 3             | 897.94                     |
| EquitasSmallFinanceBank Limited          | 0             | 0                           | 0             | 0                           | 2             | 201.52                     |
| ExportImportBank ofIndia                 | 3             | 13474.3                     | 0             | 0                           | 2             | 10878.83                   |
| FederalBank Ltd.                         | 44            | 8173.99                     | 49            | 8199.81                     | 58            | 25913.14                   |
| FirstrandBank                            | 0             | 0                           | 0             | 0                           | 2             | 2711.65                    |
| HDFCBank Ltd.                            | 218           | 1753.29                     | 260           | 9728.98                     | 313           | 16034.61                   |
| Hongkong&ShanghaiBankingCorporation Ltd. | 38            | 2645.75                     | 36            | 8611.77                     | 48            | 99.13                      |
| HSBCBank OmanS.A.O.G                     | 1             | 32.91                       | 0             | 0                           | 0             | 0                          |
| ICICIBank Ltd.                           | 433           | 26977.16                    | 588           | 34771.52                    | 686           | 41269.94                   |
| IDBI Bank Limited                        | 56            | 55795.1                     | 129           | 26205.31                    | 107           | 113683.51                  |
| IDFCBankLimited                          | 0             | 0                           | 0             | 0                           | 3             | 39.1                       |
| IFCI Ltd.                                | 1             | 9818.32                     | 5             | 25336.14                    | 1             | 21486.11                   |
| IndianBank                               | 95            | 9103.97                     | 87            | 13805.59                    | 79            | 48022.73                   |
| IndianOverseasBank                       | 138           | 57564.11                    | 109           | 59832.95                    | 95            | 137210.69                  |

## (Amount  involved  above Rs. 1 lakh)

| IndusIndBank Ltd.                      |   14 |         13340.82 |   21 |            528.9 |   23 |            289.6 |
|----------------------------------------|------|------------------|------|------------------|------|------------------|
| INGVysyaBankLtd.                       |   35 |    619.22        |    0 |      0           |    0 |      0           |
| Jammu&KashmirBank Ltd.                 |    7 |  90286.7         |   14 |    866.55        |   23 |  31147.5         |
| KarnatakaBank Ltd.                     |   22 |   2212.52        |   15 |   9195.72        |   25 |   3103.62        |
| KarurVysyaBankLtd.                     |   16 |  12316.2         |   21 |  18243.3         |   21 |   1782.35        |
| Korea ExchangeBank                     |    0 |      0           |    0 |      0           |    2 |      2.28        |
| KotakMahindraBank Ltd.                 |   56 |   5896.64        |  114 |   4502.13        |  126 |  11154.7         |
| KrishnaBhimaSamruddhiLocalAreaBank Ltd |    1 |      1.02        |    0 |      0           |    0 |      0           |
| LakshmiVilasBank Ltd.                  |    5 |   5449.3         |   12 |   2201.14        |   13 |  10995.4         |
| MashreqBank PSC                        |    0 |      0           |    1 |      3.66        |    0 |      0           |
| NainitalBank Ltd.                      |    5 |     55.23        |   21 |    187.81        |    4 |     35.91        |
| OrientalBank ofCommerce                |  127 |  76483.8         |  114 |  80729.6         |   56 |  16276.8         |
| PTBank Maybank IndonesiaTBK            |    0 |      0           |    0 |      0           |    1 |   1778.18        |
| Punjab&SindBank                        |   30 |   3916.14        |   12 |  13193.9         |   16 |  17878.3         |
| PunjabNationalBank                     |  180 | 230973           |  131 |  35285.2         |  160 | 280916           |
| RBL Bank Ltd.                          |   15 |    905           |   10 |    383.54        |   13 |    315.44        |
| ShinhanBank                            |    0 |      0           |    2 |    584.16        |    0 |      0           |
| SmallIndustriesDevelopmentBank ofIndia |    7 |   1109.28        |    2 |   4531.85        |    3 |   1130.86        |
| SouthIndianBank Ltd.                   |    9 |   1707.47        |    7 |    158.22        |    7 |  31396.3         |
| StandardCharteredBank                  |   81 |   8737.96        |  127 |    366.03        |  320 |    651.87        |
| StateBank ofBikaner&Jaipur             |   41 |  46180.6         |   48 |  14772.9         |   38 |  13287.2         |
| StateBank ofHyderabad                  |   31 |   6865.38        |   34 |  67366.7         |   38 |  11215.6         |
| StateBank ofIndia                      |  651 | 161854           |  562 | 189551           |  544 | 242237           |
| StateBank ofMysore                     |   97 |   9074.73        |   67 |   2172.85        |   92 |  27977.1         |
| StateBank ofPatiala                    |   39 |  29030.3         |   40 |  41319.9         |   47 |   3583.37        |
| StateBank ofTravancore                 |   34 |  23623.3         |   19 |  13888           |   44 |   5709.41        |
| SyndicateBank                          |  208 |  79310.4         |  178 | 164068           |  166 |  37623.2         |
| TamilnadMercantileBank Ltd.            |   21 |   1262.8         |   12 |    572.14        |   20 |   7478.6         |
| TheBank ofTokyo- MitsubishiUFJ,Ltd.    |    0 |      0           |    0 |      0           |    1 |    123.96        |
| TheRoyalBank ofScotlandN.V.            |    2 |     19.48        |    7 |     11.04        |    1 |      1           |
| UCOBank                                |   87 | 141098           |   85 |  24814.9         |   59 |  69548.2         |
| UnionBank ofIndia                      |  111 |  36982.7         |  146 | 129773           |  111 |  92072.3         |
| UnitedBank ofIndia                     |  128 |  68035.1         |   67 |  14266.7         |   30 |   8382.14        |
| VijayaBank                             |   35 |  35174.3         |   21 |  10465.4         |   58 |  13271.6         |
| Yes Bank Ltd.                          |    5 |     58.26        |   10 |    154.7         |    7 |   1738.01        |
| Total                                  | 4639 |      1.94551e+06 | 4693 |      1.86988e+06 | 5078 |      2.39348e+06 |

Source: RBI

Annex-2 Lok Sabha unstarred  question no. 3596,  to be answered on 16 th  March 2018

## Loan fraud  cases  involving  Rs. 5 crore and above

***

| Financial Year           |   2014- 15 |   2015- 16 |   2016- 17 |   2017- 18 (till Dec 2017) |   Total |
|--------------------------|------------|------------|------------|----------------------------|---------|
| No. of loanfraud cases   |        226 |        203 |        249 |                        175 |     853 |
| FIRs registered          |        214 |        172 |        189 |                        124 |     699 |
| Suits filed for recovery |        136 |        155 |        187 |                        111 |     589 |

Source: PSBs