Lok Sabha Question No. 254 (UNSTARRED), answered on 2024-02-05
Subject: Bank Frauds
Ministry: FINANCE
Asked by: Abhishek Banerjee, Shyam Yadav Singh

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

## LOK SABHA UNSTARRED QUESTION NO-254

ANSWERED ON MONDAY, FEBRUARY 5, 2024/MAGHA 16, 1945 (SAKA)

## BANK FRAUDS

## 254. SHRI ABHISHEK BANERJEE SHRI SHYAM SINGH YADAV

Will the Minister of FINANCE be pleased to state:-

- (a) the number of bank frauds during the last five years in Public Sector Banks (PSBKs), Bankwise;
- (b) the rupee value of such fraudulent transactions, bank-wise;
- (c) the steps taken to protect consumers, especially the elderly, from such frauds; and
- (d) the amount of penalty imposed on PSBs during the last five years Bank-wise?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (DR. BHAGWAT KARAD)

(a) to (b): As per Reserve Bank of India (RBI) data, bank-wise details of frauds in public sector banks (PSBs), in respect of amount involved of Rs. 1 lakh and above in each fraud, for the last five financial years are at Annex-1.

(c):  Comprehensive  steps  have  been  taken  to  keep  a  check  on  the  banking  frauds  and  deter fraudsters, which include, inter alia, the following -

- (i) An online searchable database of frauds reported by banks, in the form of Central Fraud Registry, has been set up by RBI to enable timely identification, control and mitigation of fraud risk and also to carry out due diligence during the credit sanction process.
- (ii) RBI has issued Master Directions on Frauds, which requires banks to report frauds to law enforcement agencies (LEAs), viz State Police, Central Bureau of Investigation (CBI), etc . for further investigation and appropriate actions. Further, it also requires monitoring and follow-up of cases by a special committee, quarterly placement of information before Audit Committees of bank Boards, and annual review of frauds by banks. These reviews cover, inter alia, preventive measures, fraud detection systems, systemic lacunae, remedial action, monitoring of progress of investigation and recovery, and staff accountability.
- (iii) To cover all fraud cases involving amount of Rs. 3 crore and above and to examine the role  of  all  levels  of  officials/Whole  Time  Directors  (WTDs)  (including  ex-officials/exWTDs) in PSBs, the extent and scope of the existing Advisory Board for Banking and Financial  Frauds  (ABBFF)  was  revised  by  the  Central  Vigilance  Commission  in consultation with RBI and the Government.
- (iv) Institution  of  comprehensive,  automated  Early  Warning  Systems  (EWS) in  PSBs,  with ~80 EWS triggers and use of third-party data for time-bound remedial actions.
- (v) For management of fraud risk, early detection of loan frauds, prompt reporting to RBI and investigative agencies, and timely initiation of staff accountability proceedings, RBI has  issued  a  framework  for  dealing  with  loan  frauds  and  red  flagged  accounts  (RFA), requiring  banks  to  classify  potential  fraud  accounts  as  RFAs  based  on  observation  or evaluation of early warning signals noticed.
- (vi) RBI  has  instructed  banks  to  report  deficient  third-party  services  (such  as  legal  search reports,  p roperty  valuers'  reports,  etc.)  and  collusion  of  these  service  providers  with fraudsters  to  the  Indian  Banks'  Association,  which  maintains  a  caution  list  of  such service providers.
- (vii) Heads  of  PSBs  have  been  empowered  to  issue  requests  for  issuance  of  Look-Out Circulars.
- (viii) 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.
- (ix) The  Indian  Cyber  Crime  Coordination  Centre  (I4C),  working  under  the  Ministry  of Home  Affairs has operationalised Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS) module, for immediate reporting of financial frauds and to stop siphoning-off of funds by the fraudsters.
- (x) A  toll-free  number  has  also  been  operationalised  to  get  assistance  in  lodging  online complaints regarding cybercrimes.  Further, as per inputs received from the Ministry of Home Affairs, as on 4.12.2023, amount aggregating to more than Rs. 1,000 crore have been saved in more than 4 lakh incidents through CFCFRMS module.

In  addition,  several  other  initiatives  have  also  been  taken  to  spread  awareness  amongst customers,  including  senior  citizens,  to  protect  them  from  cyber-frauds.  These  initiatives include, dissemination of messages on cyber-crime through short message service (SMS), radio campaigns, publicity on prevention of cyber-crime and cyber safety tips through social media accounts of the Indian Cybercrime Coordination Centre (I4C), conducting of electronic-banking awareness and training (e-BAAT) programmes by RBI etc .

(d): With regard to action taken against banks, RBI has informed that it undertakes enforcement action against banks wherever material violations of applicable laws and RBI directions issued thereunder  are  identified.  Further,  RBI  has  also  informed  that  from  1.1.2019  to  31.12.2023 monetary penalties of Rs. 34.14 crore have been imposed on PSBs, as per the provisions of RBI (Frauds  classification  and  reporting  by  commercial  banks  and  select  FIs)  Directions,  2016 (details of which are at Annex-2).

*****

Details of Frauds as reported by Public Sector banks during last five financial years, in respect of amount involved of  Rs. 1 lakh and above Amounts in crore Rs.

| Name of the Bank      | FY 2018-19   | FY 2018-19      | FY 2019-20   | FY 2019-20      | FY 2020-21   | FY 2020-21      | FY 2021-22   | FY 2021-22      | FY 2022-23   | FY 2022-23      |
|-----------------------|--------------|-----------------|--------------|-----------------|--------------|-----------------|--------------|-----------------|--------------|-----------------|
| Name of the Bank      | No.          | Amount involved | No.          | Amount involved | No.          | Amount involved | No.          | Amount involved | No.          | Amount involved |
| Bank of Baroda        | 293          | 7,149           | 318          | 11,794          | 204          | 7,920           | 256          | 3,441           | 204          | 1,777           |
| Bank of India         | 197          | 3,051           | 175          | 7,453           | 159          | 10,958          | 206          | 5,877           | 188          | 570             |
| Bank of Maharashtra   | 103          | 1,053           | 98           | 3,105           | 48           | 2,298           | 69           | 404             | 67           | 931             |
| Canara Bank           | 555          | 3,354           | 524          | 11,556          | 136          | 7,259           | 82           | 2,906           | 143          | 2,844           |
| Central Bank of India | 196          | 2,885           | 160          | 3,730           | 228          | 4,177           | 159          | 710             | 162          | 472             |
| Indian Bank           | 198          | 3,395           | 694          | 9,136           | 124          | 3,622           | 120          | 1,461           | 106          | 493             |
| Indian Overseas Bank  | 137          | 6,216           | 183          | 7,096           | 124          | 3,530           | 88           | 1,225           | 97           | 1,409           |
| Punjab and Sind Bank  | 40           | 313             | 42           | 367             | 69           | 3,125           | 62           | 240             | 103          | 128             |
| Punjab National Bank  | 361          | 7,507           | 480          | 20,852          | 210          | 8,156           | 216          | 7,344           | 246          | 1,808           |
| State Bank of India   | 1,012        | 8,250           | 1,211        | 34,346          | 979          | 5,765           | 1,419        | 5,457           | 1,657        | 4,658           |
| UCO Bank              | 89           | 1,723           | 64           | 5,352           | 277          | 2,656           | 89           | 586             | 208          | 1,054           |
| Union Bank of India   | 353          | 8,419           | 354          | 15,905          | 270          | 7,993           | 283          | 2,724           | 215          | 2,931           |

Source: RBI

## Lok Sabha Unstarred question no. 254, regarding BANK FRAUDS

## The amount of penalty imposed on Public Sector banks for Non-compliance with RBI direction related to frauds

Amounts in crore Rs.

| Name of the Bank      | 2019   | 2020   | 2021   | 2022   | 2023   |
|-----------------------|--------|--------|--------|--------|--------|
| Bank of Baroda        | 2.00   | --     | --     | --     | --     |
| Bank of India         | 3.00   | 1.00   | 1.00   | --     | --     |
| Bank of Maharashtra   | 1.50   | --     | 0.25   | --     | --     |
| Canara Bank           | 1.25   | --     | --     | --     | --     |
| Central Bank of India | --     | --     | --     | --     | 0.30   |
| Indian Bank           | 4.50   | --     | --     | 0.32   | --     |
| Indian Overseas Bank  | 1.50   | --     | --     | 0.28   | --     |
| Punjab National Bank  | 3.50   | --     | 1.00   | --     | --     |
| State Bank of India   | 1.00   | --     | 1.00   | --     | --     |
| UCO Bank              | 2.00   | --     | --     | --     | --     |
| Union Bank of India   | 8.25   | --     | 0.50   | --     | --     |
| TOTAL                 | 28.50  | 1.00   | 3.75   | 0.60   | 0.30   |

Source: RBI