Bank Frauds Raised By 74% in 2019: The Value of bank fraud cases increased 74%, from ₹41,167 cr in FY18 to ₹71,543 cr in FY19 but the number of cases of frauds reported by banks increased by 15% in 2018-19 on a year-on-year basis, with the amount involved rising by 73.8%, though mostly related to occurrences in earlier years.
Bank Frauds Raised By 74% in 2019
Among bank groups, public sector banks, which constitute largest market share in bank lending, have accounted for the bulk of frauds reported in 2018-19 and the Value of frauds at PSU banks raised from ₹38,260 crore in FY18 to ₹64,509 crore in FY19.
On average, banks took 22 months from the date of occurrence of the fraud to detect it. For frauds involving amounts greater than Rs 100 crore (which amounted to Rs 52,200 crore in 2018-19) took an average of 55 months to be detected.
Consequences:
- In terms of area of operations, frauds related to advances constituted the preponderant share of the total amount involved in frauds in 2018-19, while the share of frauds in off-balance sheet items declined from a year ago.
- Cheating and forgery was the major component, followed by misappropriation and criminal breach of trust.
- Fraud cases involving an amount of less than ₹1 lakh (i.e., small value frauds) were only 0.1% of the total amount involved in 2018-19.
- In terms of the number of frauds too, those related to advances were predominant followed by card/internet related frauds and deposits related frauds.
- Frauds relating to card/internet and deposits constituted only 0.3% of the total value of frauds in 2018-19.
- As for counterfeit of notes, there was a 20 percent increase in their detection for Rs 10 notes, while Rs 20 and Rs 50 notes saw an 87 percent and 57 percent increase.
- Total counterfeited Rs 200 notes in FY19 rose significantly to 12,728 from mere 79 in the previous year.
- Rs 500 notes saw the biggest surge in the number of counterfeited notes, which is by a striking 121 percent while in the case of 2,000 rupee notes, the spike was 22 percent.
- Only the Rs 100 notes saw a decline of 7.5 percent.
Banks involved in Fraudulent:
| Bank | No of cases | Amount |
| State Bank of India | 1197 | 12,012.77 crore |
| Allahabad Bank | 381 | 2855.46 crore |
| Punjab National Bank | 99 | 2526.55 crore |
| Bank of Baroda | 75 | 2297.05 crore |
| Oriental Bank of commerce | 45 | 2133.08 crore |
| Canara Bank | 69 | 2035.81 crore |
| Central Bank of India | 194 | 1982.27 crore |
| United Bank of India | 31 | 1196.19 crore |
| Corporation Bank | 16 | 960.80 crore |
| Indian Overseas Bank | 46 | 934.67 crore |
| Syndicate Bank | 54 | 795.75 crore |
| Union Bank of India | 51 | 753.37 crore |
| Bank of India | 42 | 517 crore |
| UCO Bank | 34 | 470.74 crore |
In order to curb this menace, the RBI has said that it would coordinate with various agencies including the ministry of corporate affairs to examine the feasibility of interlinking various databases and information systems to improve the system of fraud monitoring and take necessary corrective regulatory and supervisory action.
To improve the fraud risk management framework for banks, the apex bank will revise the master directions on frauds to incorporate new instructions in the light of experience gained.
The Banks will conduct workshops on frauds for the bankers based on comprehensive reviews, to sensitize them on fraud prevention, prompt/ accurate reporting and follow up action.
Fraud registry will be made more user-friendly and fraud analytics will also be improved.
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