Lok Sabha Question No. 3113 (UNSTARRED), answered on 2015-08-07
Subject: Fraudulent Loans from PSBs
Ministry: FINANCE
Asked by: RAVINDRA VISHWANATH GAIKWAD

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF FINANCIAL SERVICES

LOK SABHA

UNSTARRED QUESTION NO 3113

TO BE ANSWERED ON THE 7 TH AUGUST, 2015 / SHRAVANA 16, 1937 (SAKA)

**FRAUDULENT LOANS FROM PSBs**

QUESTION

3113. **Prof.RavindraVishwanathGaikwad:**

Will the Minister of FINANCE be pleased to state:

1. whether there has been a gradual increase in the number of fraudulent loans on the basis of fake documents from Public Sector Banks (PSBs) during the last three years;
2. if so, the details thereof along with the amount involved therein during said period, State-wise;
3. whether the Government has conducted any enquiry during the said period;
4. if so, the details thereof along with the number of officials found involved in such areas during the said period, bank / State-wise and the action taken by the Government thereon; and
5. the other corrective steps taken/being taken by the Government to regulate the process of grant of loan and to keep a check on fraudulent loan cases?

ANSWER

THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

**(SHRI JAYANT SINHA)**

(a) & (b):	Reserve Bank of India (RBI) has informed that Public Sector Banks(PSBs)  do not report cases involving raising of loans on the basis of fake documents separately.  These are reported under the head “Cheating and Forgery”, which would also include other type of fraud cases. Details of “Cheating and Forgery” frauds of Rs 1 lakh and above reported by PSBs for the last three financial years is as under:-

(Rs in crore)

|   **Sr. No.** | **Calendar Year**               |   **No. of frauds cases reported** |   **Amount involved** |
|---------------|---------------------------------|------------------------------------|-----------------------|
|            1. | 2012-13  (April to March)       |                               1316 |               5098.41 |
|            2. | 2013-14  (April to March)       |                               1352 |               4965.82 |
|            3. | 2014-15  (April to March)       |                               1601 |              11202.64 |
|            4. | 2015-16  (April, 15 to June, 15 |                                420 |               1732.25 |

State-wise details in this regard is at **Annex-I.**

(c) & (d):  	Banks initiate/probe staff accountability and staff involvement in all the fraud cases and on completion of investigation, commensurate punishment is awarded to the delinquent employees based on the seriousness of the wrongdoings as per Bank’s disciplinary rules which includes censuring, administrative warning, suspension of the employees, reduction in scales of pay, monetary penalty and recovery of losses, compulsory retirement, termination from service, dismissal with disqualification from future employment etc.

State-wise and Bank-wise details of “Cheating and Forgery” frauds of Rs. 1 lakh and above reported by PSBs where staff was involved is at **Annex-II & III** respectively.

(e):	RBI has issued Master Circular on “Frauds – Classification and reporting” vide RBI. **DBS.CFMC.BC.No.1 / 23.04.001/2015 -16 dated July 01, 2015** containing all the details/aspects relating to frauds. The same is also available on the website of RBI i.e. [www.rbi.org.in](www.rbi.org.in) . On receipt of fraud reports from banks, various aspects related to the frauds are examined and concerned banks are advised to report the case to CBI/ Police/ SFIO, examine staff accountability, complete proceedings against the erring staff expeditiously, take steps to recover the amount involved in the fraud, claim insurance wherever applicable and streamline the system as also procedures so that frauds do not recur. To compress the time taken in detection of fraud, a new framework for handling loan frauds has been put in place. The framework stipulates continuous monitoring of loan accounts, time bound action at each stage of loan’s life cycle and commencement of investigation on observing early warning signal in an account. Further the framework also prohibited banks from extending bank finance to borrowers who have defaulted and also committed a fraud for five years from the date of full payment of the defrauded amount. RBI as a part of its supervisory process also takes the following measures to prevent/reduce the incidence of frauds:

1. Issues circulars to banks from time to time about common fraud prone areas, modus operandi circulars on various types of frauds and the measures to be taken by them.
2. Issues caution advices in respect of borrowers who have defrauded the banks.
3. In order to make third parties and professionals accountable, who have played a vital role verification of the property/document or facilitated the perpetration of frauds, banks have been advised to report to Indian Bank’s Association (IBA). IBA in turn will prepare caution lists of such parties for circulation among the banks.

RBI has issued circular on *‘Legal Audit of Title Documents in Respect of Large Value Loan Accounts’* (Circular dated June 7, 2013). RBI has advised banks to subject the title deeds and other documents in respect of all credit exposures of Rs 5 crore and above to periodic legal audit and re-verification of title deeds with relevant authorities as part of regular audit exercise till the loan stands fully repaid.

The Government has set up the Central Registry, as the nodal agency for maintaining records of registrations relating to securitization, reconstruction of financial assets and security interest created over properties on 31.03.2011 to minimize the frauds relating to multiple mortgaging of a property with different lenders.

*****

**Annexure referred to in reply of part (a)& (b) of Lok Sabha Unstarred Question No. 3113 to be answered on 07.08.2015**

**Annex-I**

| **Fraud cases of Rs1 lakh and above reported by PSBs under the heading "Cheating and Forgery"**   |                   |                            |                   |                            |                   |                            |                            |                            |
|---------------------------------------------------------------------------------------------------|-------------------|----------------------------|-------------------|----------------------------|-------------------|----------------------------|----------------------------|----------------------------|
| **State / UT**                                                                                    | **2012-13**       |                            | **2013-14**       |                            | **2014-15**       |                            | **April 2015 - June 2015** |                            |
|                                                                                                   | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases**          | **Amount  (Rs. in crore)** |
| Andaman & Nicobar Islands                                                                         | 0                 | 0.00                       | 1                 | 0.98                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Andhra Pradesh                                                                                    | 152               | 745.21                     | 102               | 514.74                     | 92                | 737.42                     | 40                         | 73.75                      |
| Assam                                                                                             | 11                | 1.33                       | 12                | 13.92                      | 12                | 2.30                       | 2                          | 0.18                       |
| Bihar                                                                                             | 32                | 6.90                       | 31                | 4.42                       | 36                | 56.85                      | 24                         | 7.98                       |
| Chandigarh                                                                                        | 7                 | 52.68                      | 7                 | 529.01                     | 18                | 186.33                     | 2                          | 1.39                       |
| Chhattisgarh                                                                                      | 5                 | 0.54                       | 20                | 1.49                       | 11                | 3.50                       | 4                          | 0.39                       |
| Delhi                                                                                             | 116               | 939.98                     | 174               | 1312.89                    | 176               | 646.55                     | 41                         | 208.58                     |
| Goa                                                                                               | 9                 | 3.62                       | 6                 | 4.54                       | 4                 | 0.82                       | 2                          | 0.14                       |
| Gujarat                                                                                           | 44                | 31.82                      | 35                | 421.82                     | 63                | 1127.26                    | 18                         | 21.84                      |
| Haryana                                                                                           | 34                | 92.74                      | 21                | 62.51                      | 39                | 79.60                      | 5                          | 3.51                       |
| Himachal Pradesh                                                                                  | 6                 | 0.52                       | 8                 | 4.29                       | 7                 | 1.55                       | 4                          | 1.47                       |
| Jammu & Kashmir                                                                                   | 7                 | 11.09                      | 4                 | 0.41                       | 12                | 2.51                       | 2                          | 0.80                       |
| Jharkhand                                                                                         | 24                | 19.89                      | 69                | 26.61                      | 73                | 16.04                      | 5                          | 0.38                       |
| Karnataka                                                                                         | 84                | 52.40                      | 37                | 205.40                     | 56                | 71.27                      | 34                         | 22.45                      |
| Kerala                                                                                            | 28                | 5.78                       | 21                | 19.39                      | 30                | 13.37                      | 6                          | 5.75                       |
| Madhya Pradesh                                                                                    | 34                | 6.80                       | 49                | 36.07                      | 37                | 21.04                      | 18                         | 3.17                       |
| Maharashtra                                                                                       | 163               | 2026.77                    | 198               | 601.85                     | 198               | 2363.07                    | 50                         | 1004.65                    |
| Manipur                                                                                           | 0                 | 0.00                       | 1                 | 0.51                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Meghalaya                                                                                         | 0                 | 0.00                       | 0                 | 0.00                       | 2                 | 0.04                       | 0                          | 0.00                       |
| Mizoram                                                                                           | 0                 | 0.00                       | 0                 | 0.00                       | 1                 | 0.03                       | 0                          | 0.00                       |
| Nagaland                                                                                          | 0                 | 0.00                       | 0                 | 0.00                       | 1                 | 0.14                       | 0                          | 0.00                       |
| Orissa                                                                                            | 55                | 17.48                      | 89                | 28.05                      | 59                | 87.05                      | 15                         | 1.29                       |
| Pondicherry                                                                                       | 1                 | 0.06                       | 0                 | 0.00                       | 0                 | 0.00                       | 4                          | 0.34                       |
| Punjab                                                                                            | 82                | 114.40                     | 79                | 227.50                     | 113               | 73.05                      | 35                         | 8.05                       |
| Rajasthan                                                                                         | 39                | 15.26                      | 37                | 5.88                       | 33                | 22.71                      | 12                         | 11.65                      |
| Tamil Nadu                                                                                        | 68                | 185.86                     | 68                | 367.23                     | 141               | 1186.56                    | 26                         | 58.69                      |
| Tripura                                                                                           | 1                 | 0.15                       | 0                 | 0.00                       | 0                 | 0.00                       |                            | 0.00                       |
| Uttar Pradesh                                                                                     | 137               | 190.08                     | 143               | 67.19                      | 190               | 166.99                     | 35                         | 81.73                      |
| Uttaranchal                                                                                       | 15                | 10.06                      | 20                | 8.30                       | 24                | 10.88                      | 8                          | 2.47                       |
| West Bengal                                                                                       | 161               | 566.74                     | 117               | 499.52                     | 166               | 4305.60                    | 28                         | 211.60                     |
| Overseas Branch                                                                                   | 1                 | 0.25                       | 3                 | 1.30                       | 7                 | 20.11                      | 0                          | 0.00                       |
| **Grand Total**                                                                                   | **1316**          | **5098.41**                | **1352**          | **4965.82**                | **1601**          | **11202.64**               | **420**                    | **1732.25**                |

**Annexure referred to in reply of part (c)& (d) of Lok Sabha Unstarred Question No. 3113 to be answered on 07.08.2015**

**ANNEX-II**

| **Fraud cases of Rs1 lakh and above reported by PSBs under the heading "Cheating and Forgery" where staff involved**   |                   |                            |                   |                            |                   |                            |                            |                            |
|------------------------------------------------------------------------------------------------------------------------|-------------------|----------------------------|-------------------|----------------------------|-------------------|----------------------------|----------------------------|----------------------------|
| **State / UT**                                                                                                         | **2012-13**       |                            | **2013-14**       |                            | **2014-15**       |                            | **April 2015 - June 2015** |                            |
|                                                                                                                        | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases**          | **Amount  (Rs. in crore)** |
| Andhra Pradesh                                                                                                         | 3                 | 33.75                      | 7                 | 46.45                      | 1                 | 0.36                       | 0                          | 0.00                       |
| Assam                                                                                                                  | 0                 | 0.00                       | 0                 | 0.00                       | 4                 | 0.57                       | 0                          | 0.00                       |
| Bihar                                                                                                                  | 3                 | 0.24                       | 0                 | 0.00                       | 3                 | 6.16                       | 0                          | 0.00                       |
| Chhattisgarh                                                                                                           | 0                 | 0.00                       | 0                 | 0.00                       | 1                 | 0.09                       | 0                          | 0.00                       |
| Delhi                                                                                                                  | 2                 | 2.12                       | 0                 | 0.00                       | 6                 | 143.14                     | 1                          | 0.53                       |
| Goa                                                                                                                    | 0                 | 0.00                       | 1                 | 0.85                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Gujarat                                                                                                                | 2                 | 0.13                       | 1                 | 0.09                       | 0                 | 0.00                       | 2                          | 1.68                       |
| Haryana                                                                                                                | 1                 | 2.06                       | 1                 | 0.03                       | 2                 | 0.21                       | 0                          | 0.00                       |
| Himachal Pradesh                                                                                                       | 1                 | 0.02                       | 0                 | 0.00                       | 0                 | 0.00                       | 1                          | 0.13                       |
| Jammu & Kashmir                                                                                                        | 0                 | 0.00                       | 1                 | 0.08                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Jharkhand                                                                                                              | 0                 | 0.00                       | 0                 | 0.00                       | 1                 | 0.04                       | 0                          | 0.00                       |
| Karnataka                                                                                                              | 6                 | 1.56                       | 1                 | 0.01                       | 1                 | 0.03                       | 1                          | 1.13                       |
| Kerala                                                                                                                 | 0                 | 0.00                       | 2                 | 4.43                       | 2                 | 0.09                       | 1                          | 0.21                       |
| Madhya Pradesh                                                                                                         | 2                 | 0.09                       | 5                 | 3.98                       | 3                 | 0.09                       | 0                          | 0.00                       |
| Maharashtra                                                                                                            | 4                 | 4.11                       | 8                 | 2.40                       | 1                 | 0.13                       | 3                          | 1.39                       |
| Nagaland                                                                                                               | 0                 | 0.00                       | 0                 | 0.00                       | 1                 | 0.14                       | 0                          | 0.00                       |
| Orissa                                                                                                                 | 5                 | 0.57                       | 0                 | 0.00                       | 2                 | 1.03                       | 0                          | 0.00                       |
| Punjab                                                                                                                 | 1                 | 0.02                       | 4                 | 35.38                      | 0                 | 0.00                       | 1                          | 0.33                       |
| Rajasthan                                                                                                              | 1                 | 0.04                       | 4                 | 0.36                       | 2                 | 0.65                       | 0                          | 0.00                       |
| Tamil Nadu                                                                                                             | 0                 | 0.00                       | 4                 | 2.16                       | 5                 | 17.48                      | 1                          | 0.29                       |
| Tripura                                                                                                                | 1                 | 0.15                       | 0                 | 0.00                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Uttar Pradesh                                                                                                          | 9                 | 3.99                       | 1                 | 0.11                       | 4                 | 0.23                       | 1                          | 0.83                       |
| Uttaranchal                                                                                                            | 1                 | 3.52                       | 1                 | 0.03                       | 2                 | 2.19                       | 0                          | 0.00                       |
| West Bengal                                                                                                            | 3                 | 5.00                       | 2                 | 22.80                      | 6                 | 4.92                       | 0                          | 0.00                       |
| **Grand Total**                                                                                                        | **45**            | **57.37**                  | **43**            | **119.16**                 | **47**            | **177.55**                 | **12**                     | **6.52**                   |

**Annexe-III**

| **Fraud cases of Rs1 lakh and above reported by PSBs under the heading "Cheating and Forgery" where staff involved**   |                   |                            |                   |                            |                   |                            |                            |                            |
|------------------------------------------------------------------------------------------------------------------------|-------------------|----------------------------|-------------------|----------------------------|-------------------|----------------------------|----------------------------|----------------------------|
| **Bank Name**                                                                                                          | **2012-13**       |                            | **2013-14**       |                            | **2014-15**       |                            | **April 2015 - June 2015** |                            |
|                                                                                                                        | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases** | **Amount  (Rs. in crore)** | **No. of  Cases**          | **Amount  (Rs. in crore)** |
| Allahabad Bank                                                                                                         | 1                 | 0.06                       | 1                 | 21.88                      | 0                 | 0.00                       | 0                          | 0.00                       |
| Andhra Bank                                                                                                            | 0                 | 0.00                       | 1                 | 0.02                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Bank of Baroda                                                                                                         | 1                 | 0.15                       | 5                 | 37.17                      | 8                 | 8.60                       | 1                          | 1.50                       |
| Bank of India                                                                                                          | 6                 | 0.23                       | 1                 | 0.15                       | 4                 | 0.21                       | 0                          | 0.00                       |
| Bank of Maharashtra                                                                                                    | 2                 | 0.08                       | 5                 | 0.56                       | 0                 | 0.00                       | 3                          | 0.71                       |
| Canara Bank                                                                                                            | 1                 | 0.98                       | 3                 | 2.33                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Central Bank of India                                                                                                  | 1                 | 0.07                       | 0                 | 0.00                       | 1                 | 0.03                       | 2                          | 0.39                       |
| Corporation Bank                                                                                                       | 1                 | 0.05                       | 1                 | 0.10                       | 8                 | 146.43                     | 2                          | 1.97                       |
| Dena Bank                                                                                                              | 3                 | 8.49                       | 0                 | 0.00                       | 0                 | 0.00                       | 0                          | 0.00                       |
| IDBI Bank Limited                                                                                                      | 2                 | 32.45                      | 1                 | 34.63                      | 2                 | 0.41                       | 0                          | 0.00                       |
| Indian Bank                                                                                                            | 1                 | 0.10                       | 0                 | 0.00                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Indian Overseas Bank                                                                                                   | 0                 | 0.00                       | 1                 | 0.47                       | 0                 | 0.00                       | 0                          | 0.00                       |
| Oriental Bank of Commerce                                                                                              | 0                 | 0.00                       | 0                 | 0.00                       | 0                 | 0.00                       | 1                          | 0.96                       |
| Punjab & Sind Bank                                                                                                     | 0                 | 0.00                       | 1                 | 0.04                       | 3                 | 0.40                       | 0                          | 0.00                       |
| Punjab National Bank                                                                                                   | 7                 | 4.32                       | 5                 | 1.65                       | 0                 | 0.00                       | 1                          | 0.53                       |
| State Bank of Bikaner & Jaipur                                                                                         | 1                 | 0.02                       | 2                 | 0.19                       | 1                 | 0.51                       | 0                          | 0.00                       |
| State Bank of Hyderabad                                                                                                | 0                 | 0.00                       | 1                 | 0.48                       | 1                 | 0.36                       | 0                          | 0.00                       |
| State Bank of India                                                                                                    | 6                 | 2.38                       | 4                 | 12.83                      | 3                 | 1.03                       | 0                          | 0.00                       |
| State Bank of Mysore                                                                                                   | 2                 | 0.18                       | 0                 | 0.00                       | 2                 | 1.03                       | 0                          | 0.00                       |
| State Bank of Travancore                                                                                               | 0                 | 0.00                       | 0                 | 0.00                       | 1                 | 2.50                       | 0                          | 0.00                       |
| Syndicate Bank                                                                                                         | 2                 | 1.59                       | 2                 | 4.62                       | 1                 | 0.14                       | 0                          | 0.00                       |
| UCO Bank                                                                                                               | 3                 | 1.64                       | 2                 | 0.14                       | 8                 | 15.64                      | 1                          | 0.33                       |
| Union Bank of India                                                                                                    | 3                 | 4.32                       | 5                 | 1.83                       | 1                 | 0.06                       | 1                          | 0.13                       |
| United Bank of India                                                                                                   | 1                 | 0.20                       | 0                 | 0.00                       | 2                 | 0.11                       | 0                          | 0.00                       |
| Vijaya Bank                                                                                                            | 1                 | 0.06                       | 2                 | 0.07                       | 1                 | 0.09                       | 0                          | 0.00                       |
| **Grand Total**                                                                                                        | **45**            | **57.37**                  | **43**            | **119.16**                 | **47**            | **177.55**                 | **12**                     | **6.52**                   |