21 PSBs took hit of Rs 25,775 cr due to bank frauds in FY18; PNB, SBI worst affected, RTI reveals

The Nirav Modi-Punjab National Bank saga may have hogged the limelight in recent times, but the problem of bank frauds is much longer and deeper, two recent right to information (RTI) replies revealed.

To begin with, the 21 public sector banks (PSBs) together took a hit of whopping Rs 25,775 crore from bank frauds in the last financial year. Chandrasekhar Gaud, who had filed the RTI with the Reserve Bank of India, also told PTI that the apex bank's reply had clarified that only those cases of fraud involving a sum of over Rs 1 lakh were included in the list. Furthermore, it did not disclose the numbers of cases or the nature of the fraud.

PNB had incurred the highest loss of Rs 6461.13 crore due to different cases of fraud followed by State Bank of India's loss of Rs 2,224.86 crore. Here's how the remaining PSBs stacked up in the hit list:


Commenting on the RTI, economist Jayantilal Bhandari said that the condition of the state-owned banks was "extremely worrisome" due to banking fraud. "With regard to fraud cases, the banks are not only facing huge economic losses, but the prospects of giving new loans by them in the future are also affected adversely. This situation is obviously not good for the economy," he said.

Another economist, Prasenjit Bose, in another recent RTI, found that banking frauds have gone up significantly in the last decade. According to The Hindustan Times, the RBI response to Bose's RTI revealed that in 2008-09, the average amount involved in loan related fraud was Rs 75 lakh. This increased to Rs 9 crore in 2017-18. Here, too, only loans with a ticket size of more than Rs 1 lakh were considered.

Worse still, as per RBI's reply, the total value of bank frauds have gone up a scary 1,356 per cent in the past decade. The report added that in seven years of the 10 under review, nationalised banks accounted for more than two-third of the total amount involved in these frauds.

A total of 5,152 cases of fraud were reported in various banks of the country in the last fiscal. This is 76 more than the number of fraud cases reported a year before. A total of 5,076 cases of fraud had been reported in 2016-17.

It's worth adding here that the total loss incurred from fraud is still a small proportion of the massive non-performing assets problem afflicting the country's banking sector. Last month, rating agency Crisil had called the current financial year the "year of reckoning" for banking system.

According to senior director Somasekhar Vemuri, gross NPA will hit a peak of 11.5 per cent during the fiscal but will slip to 10.3 per cent in March 2019.

With PTI inputs