Lok Sabha Question No. 2431 (UNSTARRED), answered on 2019-07-08
Subject: Bank Scams
Ministry: FINANCE
Asked by: Bhagwanth Khuba

## GOVERNMENT  OF INDIA MINISTRY  OF FINANCE

ANSWERED  ON-08.07.2019

## LOK SABHA UNSTARRED QUESTION NO-2431

## BANK SCAMS

## 2431. SHRI BHAGWANTH  KHUBA

## Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  the Government  is aware  of many  National  Banks losing  their  credibility due to big bank scams, if so, the details  thereof,  bank-wise;
- (c) if so, the details  thereof  including  the amount  involved  therein  at present,  bank-wise;  and
- (b) whether  it is true  that  in these scams the bank  employees  are involved;
- (d) the corrective  steps taken  by  the Government  in this  regard?

## ANSWER

- (a)  to  (d)  Government   has  taken   comprehensive   steps  to  reduce   the  incidence   of  frauds  in banks.  The steps taken  include, inter-alia, the following:

## THE MINISTER  OF STATE  IN THE  MINISTRY  OF FINANCE (SHRI  ANURAG  SINGH  THAKUR )

- (1) 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 provides, inter-alia , that -
2. (ii) examination  be  initiated   for  wilful   default   immediately upon  reporting   fraud   to RBI; and
3. (i) 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;
4. (iii) report  on the borrower  be sought  from the Central  Economic  Intelligence  Bureau in case an account  turns  NPA.
- (3) PSBs have been advised to 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   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  (LOCs).
- (2) 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. 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.
- (4) For enforcement  of auditing  standards  and ensuring  the quality  of audits,  Government has established the  National  Financial  Reporting  Authority as an independent  regulator.
- (5) Instructions/advisories have  been  issued  by   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   certified   copy   of  the  passport   of  the promoters/directors and  other authorised signatories of companies   availing loan facilities  of more  than  Rs. 50 crore.

The impact  of the above steps is reflected  in Reserve  Bank of India (RBI)'s Financial  Stability Report  (FSR) of June 2019. As per FSR,  systemic  and comprehensive  checking  of legacy  stock of NPAs of PSBs for frauds has helped unearth  frauds perpetrated  over a number  of years, which  is getting  reflected  in increased  number  of reported  incidents  of frauds in recent  years compared  to previous   years.   Further,   based  on  the  date  of  occurrence,   the  number   of  bank frauds involving  an amount  of Rs. 1 lakh  and above for the last five financial  years,  as reported by Public  Sector  Banks to RBI, has declined  steadily,  and the details,  including  amount  involved therein,  are as under:

| FY of occurrence   | Number   | Amount (in crore Rs.)   |
|--------------------|----------|-------------------------|
| 2014-15            | 2,630    | 20,005                  |
| 2015-16            | 2,299    | 15,163                  |
| 2016-17            | 1,745    | 24,291                  |
| 2017-18            | 1,545    | 6,916                   |
| 2018-19            | 739      | 5,149                   |

## Bank-wise  details  are at Annex-I.

To strengthen  PSBs, Government  has implemented  a comprehensive  4R's strategy  consisting of recognition  of NPAs  transparently, resolution  and recovering  value  from  stressed accounts, recapitalising PSBs, and reforms  in PSBs and financial  ecosystem  to ensure  a responsible  and clean  system.   Financial   Gains  to  PSBs  from   this   strategy   are  now   amply   visible   in  financial terms.  Gross NPAs  of PSBs, as per RBI data on global  operations  (including  provisional  data for  March 2019,  as  reported   on  2.7.2019) ,  have  reduced   over  the  last  financial   year   by   Rs. 1,06,032 crore,  and recovery  of Rs. 3,09,568 crore  has been effected over the last four financial years   (excluding  recovery  in IDBI Bank Limited  made during  2018-19) has been effected by these banks  over the last four financial  years,  including  a record  recovery  of Rs. 1,21,076 crore in the last financial  year.  These gains,  coupled  with  the decline  in the incidence  of frauds,  have enhanced  the credibility of PSBs.

As per RBI's Master  Directions  on Frauds,  frauds may  occur  due to number  of reasons, some of which  may  also involve  staff accountability. As per RBI's instructions,  staff accountability in all   bank   fraud   cases  is  to  be  examined   quickly, and such cases may  be closed only  when  the examination of staff accountability has been completed. Bank-wise details of staff accountability fixed in cases of fraud  are at Annex-II.

Note: NPA Figures cited above for PSBs include those for IDBI Bank Limited, which was recategorised as a private sector bank by RBI with effect from 21.1.2019.

## Details of frauds (Based on date of occurrence - Amount  Involved  Rs. 1 lakh and above) for  Public Sector Banks

| Bank Name                             | FY2014-15   | FY2014-15       | FY 2015-16   | FY 2015-16      | FY 2016-17   | FY 2016-17       | FY 2017-18   | FY 2017-18   | FY 2018-19   | FY 2018-19     | Comprehensive measures have been taken to prevent frauds including directions to banks to examine all NPA accounts above Rs. 50 crore from the angle of possible fraud, initiation of criminal proceedings, enactment of Fugitive Economic Offenders Act 2018, creation of Central Fraud Registry,empoweringBank Headsto requestfor issue of Look Out Circular, establishment of National Financial Reporting Authority, Straight through processing betweenCore Banking System and SWIFT, advice to banks to obtain certified copy of passport of promoters/directors of companies availing loan exceedingRs.50 croreetc.   |
|---------------------------------------|-------------|-----------------|--------------|-----------------|--------------|------------------|--------------|--------------|--------------|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                       | Number      | Amount          | Number       | Amount          | Number       | Amount           | Number       | Amount       | Number       | Amount         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| AllahabadBank                         | 35          | 860.15          | 20           | 162.78          | 63           | 1,398.19         | 11           | 40.77        | 12           | 509.67         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Andhra Bank                           | 40          | 879.86          | 58           | 56.78           | 36           | 75.82            | 37           | 880.11       | 11           | 193.51         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Bank ofBaroda                         | 263         | 3,124.52        | 153          | 1,348.10        | 140          | 1,723.83         | 84           | 695.29       | 32           | 797.12         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Bank ofIndia                          | 160         | 1,648.77        | 121          | 772.57          | 95           | 978.54           | 99           | 1,247.63     | 52           | 43.64          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Bank ofMaharashtra                    | 64          | 1,177.63        | 36           | 170.63          | 34           | 391.29           | 32           | 1,004.86     | 38           | 791.31         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| CanaraBank                            | 153         | 260.54          | 89           | 432.18          | 48           | 229.95           | 50           | 97.85        | 24           | 2.48           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| CentralBank ofIndia                   | 121         | 867.77          | 79           | 1,051.83        | 59           | 153.85           | 56           | 11.08        | 45           | 2.53           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Corporation Bank                      | 75          | 256.93          | 57           | 42.70           | 52           | 123.46           | 12           | 97.13        | 5            | 0.05           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| DenaBank                              | 30          | 734.29          | 36           | 567.74          | 24           | 40.25            | 11           | 232.57       | 3            | 2.71           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| IDBI Bank Limited                     | 92          | 149.40          | 130          | 1,172.75        | 91           | 989.98           | 94           | 99.84        | 99           | 59.22          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| IndianBank                            | 70          | 90.06           | 48           | 128.06          | 70           | 59.45            | 47           | 133.66       | 20           | 2.92           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| IndianOverseasBank                    | 113         | 1,803.77        | 74           | 1,374.87        |              |                  |              | 372.08       |              |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| OrientalBank ofCommerce               | 124         | 100.59          | 108          | 775.77          |              | 1,115.98         | 34           |              | 30           |                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                       |             |                 |              |                 | 53           | 301.96           | 24           | 36.82        | 8            | 2,272.89 24.89 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Punjaband SindBank PunjabNationalBank | 27          | 82.70           | 17           | 413.06          | 42 22        | 117.07 14,734.52 | 3 108        | 2.19 324.83  | 0 33         | 0.00 264.79    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| StateBank ofIndia                     | 142 588     | 524.06 4,095.18 | 142 514      | 2,559.20 929.92 | 101 469      | 444.28           | 618          | 294.56       | 236          | 59.69          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

Amounts  in crore  Rs.

| ofBikanerand Jaipur    |   18 | 5.68     |   8 | 0.79     | 5   |   0.24 | Merged with SBI   | Merged with SBI   | Merged with SBI   | Merged with SBI   | StateBank     |
|------------------------|------|----------|-----|----------|-----|--------|-------------------|-------------------|-------------------|-------------------|---------------|
| StateBank ofHyderabad  |   25 | 77.83    |  18 | 72.18    | 6   |   7.65 |                   |                   |                   |                   |               |
| StateBank ofMysore     |   26 | 21.75    |  75 | 22.01    | 12  |   4.24 |                   |                   |                   |                   |               |
| StateBank ofPatiala    |   17 | 21.04    |  15 | 3.00     | 6   |   0.45 |                   |                   |                   |                   |               |
| StateBank ofTravancore |   16 | 121.95   |  22 | 3.23     | 15  |   0.67 |                   |                   |                   |                   |               |
| BhartiyaMahilaBank     |    1 | 0.05     |   3 | 0.50     | -   |   0    |                   |                   |                   |                   |               |
|                        |  200 | 910.31   | 249 | 325.61   | 127 | 133.81 | 78                | 613.42            | 27                | 84.24             | SyndicateBank |
|                        |   65 | 1,410.54 |  36 | 237.12   | 31  | 233.77 | 41                | 103.25            | 27                | 2.89              | UCOBank       |
| UnionBank ofIndia      |  117 | 611.72   |  95 | 2,341.00 | 83  | 612.74 | 69                | 480.03            | 15                | 29.08             |               |
| UnitedBank ofIndia     |   21 | 2.61     |  39 | 14.01    | 29  | 402.85 | 15                | 2.22              | 20                | 4.60              |               |
| VijayaBank             |   27 | 165.03   |  57 | 185.07   | 32  |  16.58 | 22                | 145.96            | 2                 | 0.94              |               |

Source: RBI

Note: IDBI Bank Limited was recategorised as a private sector bank by RBI with effect from 21.1.2019.

## Lok Sabha Unstarred  Parliament  Question  No. 2431,  for  8.7.2019

## Details of fraud  cases  in which accountability  was fixed of staff, among others, during  the last five  financial years

| Bank                    | Number   | Amount outstanding in the accounts involvedin fraud   |
|-------------------------|----------|-------------------------------------------------------|
| AllahabadBank           | 220      | 4,730                                                 |
| AndhraBank              | 257      | 812                                                   |
| Bank ofBaroda           | 253      | 875                                                   |
| Bank ofIndia            | 229      | 1,511                                                 |
| Bank ofMaharashtra      | 174      | 1,433                                                 |
| CanaraBank              | 503      | 1,727                                                 |
| CentralBankof India     | 514      | 7,490                                                 |
| Corporation Bank        | 434      | 6,333                                                 |
| DenaBank                | 158      | 2,020                                                 |
| IDBI BankLimited        | 169      | 1,064                                                 |
| IndianBank              | 324      | 838                                                   |
| IndianOverseasBank      | 130      | 515                                                   |
| OrientalBankof Commerce | 585      | 4,849                                                 |
| Punjaband SindBank      | 97       | 489                                                   |
| PunjabNationalBank      | 558      | 21,165                                                |
| StateBank ofIndia       | 2,222    | 5,785                                                 |
| SyndicateBank           | 322      | 795                                                   |
| UCOBank                 | 271      | 636                                                   |
| UnionBankof India       | 65       | 60                                                    |
| UnitedBank ofIndia      | 17       | 4                                                     |
| VijayaBank              | 157      | 979                                                   |

Source: PSBs

Amount in  crore  Rs.