Banks, select financial institutions report frauds involving Rs 1.13 lakh crore in H1 of FY20: Sitharaman

Frauds involving Rs 1,13,374 crore were reported by banks and select financial institutions in the first half of the current financial year, Finance Minister Nirmala Sitharaman told Parliament on Monday.

In a written reply to a question in the Lok Sabha, the minister said the government in 2015 had issued 'Framework for timely detection, reporting, investigation relating to large value bank frauds' for public sector banks (PSBs) to deal with suspected frauds involving sums of money in excess of Rs 50 crore.

It had also instituted wide-ranging structural and procedural reforms through the framework and other steps to check fraudulent banking practices.

She said systematic and comprehensive checking, including legacy stock of PSBs' non-banking assets (NPAs), for frauds under the framework has been taken note of by the Reserve Bank of India (RBI) in its Financial Stability Report in December 2019, where it has observed that this has helped unearth frauds perpetrated over a number of years.

"This is reflected in the increased amount involved in frauds of Rs 1 lakh and above, reported by scheduled commercial banks and select financial institutions, from Rs 23,934 crore in the financial year 2016-17 to Rs 41,167 crore in 2017-18, Rs 71,543 crore in 2018-19, and Rs 1,13,374 crore in the first half of the current financial year," she said.

The minister further said that while improved "detection" and "reporting" has increased the reported amount involved in recent years, the comprehensive steps taken to check bank frauds have resulted in the amount involved by year of occurrence of fraud showing a declining trend.

She said amount involved in frauds that took place in the reporting year reduced sharply from Rs 38,548 crore in 2016-17 to Rs 16,084 crore in 2017-18, increased slightly to Rs 18,893 crore in 2018-19, and declined again to Rs 3,010 crore in the first half of the current financial year.

Sitharaman said that primarily, as a result of transparent recognition of stressed assets as NPAs, gross NPAs of PSBs, as per RBI data on global operations, rose from Rs 2,79,016 crore as on March 31, 2015, to Rs 6,84,732 crore as on March 31, 2017, and Rs 8,95,601 crore as on March 31, 2018.

She further said that as a result of the government's strategy of recognition, resolution, recapitalisation and reforms, gross NPAs of PSBs have since declined by Rs 1,68,305 crore to Rs 7,27,296 crore as on September 30, 2019.