Lok Sabha Question No. 918 (UNSTARRED), answered on 2018-12-14
Subject: Bank Fraud Cases
Ministry: FINANCE
Asked by: RANJANBEN BHATT

## GOVERNMENT  OF INDIA MINISTRY  OF FINANCE DEPARTMENT  OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. †918 TO BE ANSWERED ON THE 14 TH  DECEMBER 2018/ AGRAHAYANA 23, 1940  (SAKA) Bank Fraud Cases

## †918.   SHRIMATI RANJANBEN  BHATT:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  the Government  is aware  of the bank  fraud cases are increasing  in the country,  if so, the details  thereof;
- (b) whether   the  Government   is  planning   to  take   any   step  to  prevent   the  banking fraud;  and
- (c) if so, the details  thereof  and if not,  the reasons  therefor?

## ANSWER

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

(a) to (c): As per the Reserve  Bank of India (RBI), Scheduled  Commercial  Banks (SCBs) report   cases  of  fraud   where   the  amount   involved   is  above  Rs.  1  lakh   to  RBI.  Frauds reported  over the last three  financial  years  and current  financial  year  (till  30.9.2018)  are at Annexure.

A number  of measures  being  taken  to control  and prevent  frauds in banks,  including, inter alia , the following:

- (a) Government  has issued 'Framework  for timely  detection,  reporting,  investigation etc.  relating   to  large   value   bank   frauds'  to  Public   Sector   Banks   (PSBs),  which provides, inter-alia , that ¾
- (i) all  accounts  exceeding  Rs. 50 crore,  if classified  as Non-Performing Assets, 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;
- (ii) examination   be  initiated   for  wilful   default   immediately upon  reporting fraud to RBI; and
- (iii) report  on the borrower  be sought  from the Central  Economic  Intelligence Bureau in case an account  turns  NPA.
- (b) Fugitive   Economic   Offenders   Act,   2018  has  been  enacted   to  deter   economic offenders  from  evading   the  process  of  Indian   law   by   remaining   outside   the
- jurisdiction  of Indian  courts.  It 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.
- (c) Central  Fraud  Registry  (CFR),  based on Fraud  Monitoring Returns  filed by  banks and  select  financial   institutions, has  been  set  up by   RBI  as  a  searchable   online central  database  for use by  banks.
- (d) For  enforcement   of  auditing   standards   and  ensuring   the  quality   of  audits, Government has initiated establishment of National Financial Reporting Authority as an independent  regulator.
- (e) PSBs have been instructed  to-
- (i) ensure implementation, within  stipulated  deadlines,  measures  prescribed  by RBI for strengthening  the SWIFT  operating  environment  in banks,
- (ii) decide on publishing  photographs  of wilful  defaulters,   in  terms   of  RBI's instructions  and as per their  Board-approved  policy,
- (iii) meticulously follow  RBI's framework  for dealing  with  loan  frauds and Red Flagged Accounts,
- (iv) implement   RBI  guidelines   to  prevent   skimming   of  ATM/debit/credit cards, and
- (v) ensure  legal audit of  title   documents   in  respect  of  large   value   loan accounts,
- (vi) obtain  certified  copy  of the passport  of the promoters/directors and other authorised  signatories  of companies  availing  loan  facilities  of more  than  Rs. 50 crore,
- (vii) strictly  ensure  rotational  transfer  of officials/employees.

Annexure Lok Sabha Unstarred  Question  No. 918,  regarding  'Bank Fraud Cases', for  14.12.2018

Frauds (amount involved  Rs. 1 lakh and above) reported  by Scheduled Commercial

| Year of reportingof fraud   | Number of frauds reported*   | Amount involved (in crore Rs.)*   | * Frauddata is bytheyearof reportingand notthe yearof occurrenceof the fraudor sanctionof loan,Letterof Undertaking etc.,whichmaybe of an earlierperiod. E.g., the fraudinPNB'sBradyHouse branchwasreportedin February2018 butis a continuingfraudsince 2011.   |
|-----------------------------|------------------------------|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2015-16                     | 4,693                        | 18,699                            |                                                                                                                                                                                                                                                                 |
| 2016-17                     | 5,076                        | 23,934                            |                                                                                                                                                                                                                                                                 |
| 2017-18                     | 5,917                        | 41,168                            |                                                                                                                                                                                                                                                                 |
| 2018-19 (up to 30.9.2018)   | 3,416                        | 30,420                            |                                                                                                                                                                                                                                                                 |

## Banks over  the last three  financial years and current  financial year (till 30.9.2018)

Source: RBI