Banking Frauds Witness Hike During Modi Govt Rule, Says Report – CORPORATE ETHOS

Banking Frauds Witness Hike During Modi Govt Rule, Says Report

By: | January 2, 2019

Jan 2: In May 2014, the Narendra Modi-led National Democratic Alliance came to power at the Centre. After this, India encountered an increase in the amount of money involved banking frauds. So says a report.

In the Financial Stability Report, the data released by Reserve Bank of India states that the in last five years Rs 1.34 lakh crore is the total amount of money involved in banking frauds across all Indian banks and financial institutions. Out of this, most of the 80% are all frauds related to bank credit.

An amount of Rs 41,167 crore was lost in the name of fraud in the year 2017-2018. This is 4.04 times higher than the 2013-14 amount of Rs 10,171. This was the year before Modi government came to force.

According to the report, in the first six months of fiscal 2018-2019, Rs 30,420 crore worth banking frauds were committed. The experts are of the view that this year’s total banking fraud values will exceed the one which was listed last year. In the past four years banking frauds worth Rs 1.34 lakh was committed. Out of this, Rs 1.06 lakh crore were lost to credit-related frauds.

News is that, in the past four years, there was a hike in the number of credit frauds when compared to the non-credit frauds witnessed by banks. In each credit frauds, banks lost Rs 9.6 crore. This is 4.5 times more than the Rs 2.2 crore which the bank lost on each non-credit banking fraud. In the past four years, a total of 23,741 banking frauds were reported. From this, 11,016 are related to credit frauds.

There are RBI data which states that there was a hike in the amount involved in banking frauds since September 2017. The public sector banks (PSBs) dominates the relative share of frauds.

Insufficient risk management process is the reason behind the dominance of frauds in PSBs. RBI states that the valuation and inculcation of appropriate Risk Culture is very important when it comes to an organizational setup.

The diamond merchants Nirav Modi and Mehul Choksi, the uncle-nephew duo’s banking fraud gave a huge blow in the banking sector. The fraud in 2017-18 involved an amount of Rs 13,500 crore.