Lok Sabha Question No. 611 (UNSTARRED), answered on 2018-07-20
Subject: Financial Frauds by Business Houses causing NPAs
Ministry: FINANCE
Asked by: RAHUL RAMESH SHEWALE, SANJAY SHAMRAO DHOTRE, BHARTRUHARI MAHTAB

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

## LOK SABHA

TO BE ANSWERED  ON THE 20 th  JULY,  2018/ASHADHA  29, 1940 (SAKA)

UNSTARRED  QUESTION  NO:

## QUESTION

## FINANCIAL  FRAUDS  BY BUSINESS HOUSES CAUSING  NPAs

## 611:   SHRI RAHUL  SHEWALE: SHRI  SANJAY  DHOTRE: SHRI  BHARTRUHARI  MAHTAB:

Will  the Minister  of FINANCE  be pleased to state:

- a) whether  the Government  has assessed the impact  of financial  frauds committed  by various  business houses including  Bangalore  based Airline  and Mumbai  based gems companies   on  the  Non-Performing   Assets  (NPAs)   of  Public   and  Private   Sector Banks in the country;
- b) if so, the details  thereof  during  the last five years,  bank-wise  and if not,  the reasons therefor;
- c) the details  of increase  in such NPAs  during  the said period,  bank-wise;
- d) whether   the  Acts  enacted   and  Rules framed there   under to  curb  NPAs   have achieved  the desired  results  in the country  during  the said period;  and
- e) if so, the details  thereof  and if not,  the reasons  therefor?

## ANSWER

## THE MINISTER  OF STATE  IN THE  MINISTRY  OF FINANCE (SHRI SHIV PRATAP  SHUKLA)

To be answered by

(a) to (c):  As per Reserve  Bank of India (RBI) data,  the details  of loan  frauds for cases of Rs. 1 lakh  and above,  the number,  amount  and percentage  of loan  frauds reported  by banks during  the last five financial  years  are at Annexure.  It may  be noted  that  fraud data is by  the year  of reporting  and not the year  of occurrence  of the fraud or sanction of loan,  Letter  of Undertaking etc.,  which  may  be of an earlier  period. E.g., the fraud in PNB's Brady  House branch  was reported  in February  2018 but is a continuing  fraud since 2011.

As  regards   NPAs   of  business houses, as  per  the  provisions   of  section 45E  of  the Reserve  Bank of India Act,  1934, RBI is prohibited  from disclosing  credit  information, which   shall   be  treated   as  confidential   and  not  be  published   or  otherwise disclosed. Further,  as regards  NPAs  of Airline  and Gems industries,  RBI has informed  that  data

611

regarding   the  industrial   sector,   such  as  Airlines   and  Gems  industries,   is  not  collected and, therefore,  data on frauds in Airlines  and Gems industries  is not maintained.

(d)  and  (e):  Several   enactments   have  been  effected  to  improve   recovery,   such  as  the Insolvency   and  Bankruptcy Code,   2016,  the  amendments   enacted   to  the  Recovery   of Debts Due to Banks and Financial  Institutions  Act,  1993 (under  which  Debts Recovery Tribunals  are established)  and the Securitisation and Reconstruction  of Financial  Assets and Enforcement  of Securities  Interest   Act,   2002 (SARFAESI  Act),   and  the  Banking Regulation  (Amendment)  Act,  2017. As a result,  there  has been substantial  growth  in recovery.  As per RBI data,  recovery  in NPAs  of PSBs has grown  from Rs. 40,903 crore in financial  year  (FY) 2015-16 to Rs. 53,250 crore  in FY 2016-17 and Rs. 66,970 crore  in FY 2017-18, registering  year-on-year  growth  of 30% and 26% in FY 2016-17 and in FY 2017-18 respectively.

Debts  Recovery   Tribunals   (DRTs),   established   under the  Recovery   of  Debts  Due  to Banks and Financial  Institutions  Act,  1993, are playing  a significant  role  in disposal  of cases and through  them,  a large  amount  has been recovered  from  NPA  accounts.  As per data  reported   by   DRTs,   73,554  cases  have  been  disposed  of  and  Rs.  23,735  crore recovered   during   the  last  three   financial   years.   Further,   as  per  data  reported   by   RBI, during  the same period,  Scheduled  Commercial Bankshave recovered  Rs. 17,765 crore through  the Lok  Adalat  channel .

Lok  Sabha Unstarred  Question  No. 611,  for  20.7.2018 Details  of Loan Frauds reported  during  the Last Five Years- Fraud  cases  of Rs. 1 Lakh and Above

|                                           | F.Y. 2013-14   | F.Y. 2013-14   | F.Y. 2014-15   | F.Y. 2014-15   | F.Y. 2015-16   | F.Y. 2015-16   | F.Y. 2016-17   | F.Y. 2016-17   | F.Y. 2017-18   | F.Y. 2017-18   |
|-------------------------------------------|----------------|----------------|----------------|----------------|----------------|----------------|----------------|----------------|----------------|----------------|
| Areaof Operations                         | No. of frauds  | Amount         | No. of frauds  | Amount         | No. of frauds  | Amount         | No. of frauds  | Amount         | No. of frauds  | Amount         |
| Total - Loan Frauds                       | 1,990          | 8,412          | 2,251          | 17,122         | 2,125          | 17,368         | 2,322          | 20,561         | 2,495          | 22,470         |
| Total - AllFrauds                         | 4,306          | 10,171         | 4,639          | 19,455         | 4,693          | 18,699         | 5,076          | 23,934         | 5,879          | 40,996         |
| Percentage of Loan Frauds to Total Frauds | 46.21          | 82.71          | 48.52          | 88.01          | 45.28          | 92.88          | 45.74          | 85.91          | 42.44          | 54.81          |

Source: RBI

Amount in  crore  Rs.

Note: Fraud data is by the year of reporting  and not the year of occurrence of the fraud  or sanction of loan, Letter  of Undertaking etc., which may be of an earlier  period. E.g., the fraud  in PNB's Brady House branch was reported  in February  2018  but is a continuing  fraud  since 2011.