Bank fraud touches ₹71,543 cr in 2018-19: RBI annual report

Number of frauds related to advances were predominant followed by card/internet related frauds and deposits related frauds, the report said. Representative purpose only. Photo: iStock.

The number of cases of frauds reported by banks saw a jump of 15 per cent year-on-year basis in 2018-19, with the amount involved increasing by 73.8 per cent in the year, RBIs annual report showed.

In FY19, banking sector reported 6,801 frauds involving ₹71,542.93 crore as against 5,916 cases involving ₹41,167.04 crore reported in 2017-18.

Among bank groups, PSBs, which constitute the largest market share in bank lending, have accounted for the bulk of frauds reported in 2018-19.

It was followed by private sector banks and foreign banks. In the reporting year, state-run banks reported 3,766 cases of frauds worth ₹64,509.43 crore as against 2,885 cases involving ₹38,260.8 crore.

The report said that the average lag between the date of occurrence and its detection by banks was 22 months. “The average lag for large frauds, i.e. ₹100 crore and above, amounting to ₹52,200 crore reported during 2018-19, was 55 months,” it said.

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.

Number of frauds related to advances were predominant followed by card/internet related frauds and deposits related frauds, the report said.

Frauds relating to card/internet and deposits constituted only 0.3 per cent of the total value of frauds in 2018-19. 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 per cent of the total amount involved in 2018-19, the report showed. RBI said 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, will conduct workshops on frauds for the bankers based on comprehensive reviews, to sensitise 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, it said.