Lok Sabha Question No. 1214 (UNSTARRED), answered on 2020-09-19
Subject: Bank Frauds
Ministry: FINANCE
Asked by: Upendra Singh Rawat, Rahul Ramesh Shewale, Parvatagouda Chandanagouda Gaddigoudar

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## LOK SABHA UNSTARRED QUESTION NO-1214 ANSWERED ON-19.09.2020

## Bank Frauds

1214. SHRI UPENDRA SINGH RAWAT:

SHRI RAHUL RAMESH SHEWALE:

SHRI P.C. GADDIGOUDAR:

Will the Minister of FINANCE be pleased to state:

- a) whether it is a fact that there has been a gradual increase in the number of fraudulent loans from public sector banks each of the last three years and current year especially lock down due to COVID-19; during during
2. (c) whether any steps are taken by the Government to regulate the process of grant of loan to prevent such malpractices; and being
- (6) if the details of all such cases including the loss of amount to customers and banks due to such frauds, bank-wise; SO,
4. (d) if so, the details thereof and if not; the reasons therefor?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

(SHRI ANURAG SINGH THAKUR)

(a) to (d): There have been a steep reduction in the occurrence of bank frauds, with the amount involved in loan related frauds declining steeply from a of 0.91% of the total advances of number of loan related frauds declining from a peak of 2,213 in FY2012-13 to 292 in FY201920 . Comprehensive steps taken to check bank frauds and strengthening of monitoring of the banking mechanism have led to this reduction With regard to gradual increase in the number of fraudulent loans in PSBs the lockdown due to COVID-19, Reserve Bank of India (RBI); which compiles data to bank loan frauds has apprised that it does not have any COVID-specific category on which data on frauds can be generated Year-wise and bank-wise details of the number of loan frauds by the year of occurrence for the last three are at years Annex: peak during relating

With regard to the loss of amount to customers and banks   due to loan frauds, RBI has informed that the amount involved does not equate with the loss suffered by the reporting bank Furtheg; the entire amount lent in case of borrowal accounts need not necessarily have been diverted by the borrower or fraudster: In case of borrower accounts, amount involved may refer to the amount outstanding in the books of the reporting bank

The comprehensive steps taken to check bank frauds include, inter-alia, the following:

- Issuance by the Government in 2015 of "Framework for timely detection, reporting investigation etc\_ to value bank frauds" to PSBs for with suspected frauds involving sum of money in excess of Rs. 50 crore; relating large dealing

- "p of & searchable Central Fraud Registry on modus operandi and details of fraud perpetrators; Setting

- (ii) Enactment of the Fugitive Economic Offenders 2018 to provide for attachment of property of a fugitive economic offender; confiscation of such offenders and disentitlement of the offender from defending any civil claim; property Act,

- (iv) Empowerment of the heads of PSBs to issue requests for issuance of look-out circulars;

- Establishment of the National Financial  Reporting Authority as an independent regulator for enforcement of standards and the quality of audits; auditing ensuring

- with RBI penalising banks for in fraud  recognition and   encouraging  banks to commission forensic audits; and along delay

- (vii) Non-sanction of any   additional loan to wilful defaulters by banks and financial institutions, debarment of their units from new ventures for and debarment from participating in the insolvency resolution years, process: floating five

Comprehensive steps have also been taken to improve the process of grant of and their disbursement; including, inter-alia, through loans

- (a) Technology- and data-driven risk assessment with prudential underwriting and systems, for which- pricing

- Risk and scrutiny that comprehensively factors in data and non- financial factors and provides for higher scrutiny of high-tisk cases has been introduced in banks; scoring third-party

- () Adherence to tisk-based pricing has been improved substantially;

- (ii) Improved credit   policies been adopted that   provide for   improved consortium of cash and disbursement arrangements; and have lending; ring-] fencing flows,

- up of Loan Management Systems; Setting -

- Introduction of Early Signals   (EWS)   systems in banks,  with ~ 80  EWS triggers third-party data and workflow for time-bound remedial actions; Warning including

- (d) Risk from group entities in which the borrower has above 26% stake are now factored in the risk assessment; and

- (e) Strict   segregation of monitoring and sanctioning roles in high-value and engagement of~specialised monitoring  agencies   combining   financial and domain knowledge fof effective monitoring of loans above Rs 250 crore loans,

## Lok Sabha unstarred question no 1214, regarding Bank Frauds, for 19.9.2020

## Number of loan related frauds reported by public sector banks, by the year of occurrence

| Bank                      | 2017-18   |   2018-19 | 2019-20   |
|---------------------------|-----------|-----------|-----------|
| Allahabad Bank            | 182       |        32 | 3         |
| Andhra Bank               | 48        |        30 | 4         |
| Bank of Baroda (BoB)      | 88        |        46 | 19        |
| Dena Bank                 | 7         |         2 | Merged    |
| Vijaya Bank               | 17        |         2 | with BoB  |
| Bank of India             | 49        |        23 | 6         |
| Bank of Maharashtra       | 46        |        51 | 18        |
| Canara Bank               | 36        |        19 | 9         |
| Central Bank of India     | 27        |        11 | 14        |
| Corporation Bank          | 7         |         3 |           |
| IDBI Bank Limited*        | 40        |        24 |           |
| Indian Bank               |           |        20 |           |
| Indian Overseas Bank      | 49        |        46 | 17        |
| Oriental Bank of Commerce | 8         |         6 | 3         |
| Punjab and Sind Bank      | 6         |         2 | 23        |
| Punjab National Bank      | 68        |        53 | 11        |
| State Bank of India       | 284       |       259 | 48        |
| Syndicate Bank            | 138       |        59 | 20        |
| UCO Bank                  | 14        |         8 | 64        |
| Union Bank of India       | 78        |        13 | 8         |
| United Bank of India      | 12        |        36 | 19        |

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