Improved detection, reporting bring down bank fraud cases: MoS Finance

Improved detection and reporting, along with steps taken to check bank frauds, have resulted in a sharp decline in the occurrence of such incidence, Parliament was informed on Monday.

Sharing data, Minister of State for Finance Bhagwat Karad said bank frauds have declined from Rs 77,544 crore in 2013-14 to Rs 1,650 crore in 2022-23.

Comprehensive steps, including measures to address security flaws/loopholes and to strengthen the fraud risk management mechanism in banks, have been taken by the government, RBI and public sector banks (PSBs), Karad said in a written reply to the Lok Sabha.

Some of the measures include an online searchable database of frauds reported by banks, in the form of the Central Fraud Registry has been set up to enable timely identification, control and mitigation of fraud risk and also to carry out due diligence during the credit sanction process and heads of PSBs have been empowered to issue requests for issuance of Look-Out circulars.

Besides, he said a National Cyber Crime Reporting Portal has been launched by the Ministry of Home Affairs to enable the public to report incidents on all types of cybercrimes and a toll-free number has also been operationalised to get assistance in lodging online complaints.

In addition, he said the Fugitive Economic Offenders Act, 2018, has been enacted to provide for attachment of property of a fugitive economic offender, confiscation of such offender's property and disentitlement of the offender from defending any civil claim.

Directorate of Enforcement (ED), the agency mandated for the investigation and prosecution of cases under the Prevention of Money Laundering Act, 2002 (PMLA), has apprised that it has recorded 757 cases involving bank fraud in public and private sector banks under the provisions of PMLA in the last ten years and 36 cases in the current year, Karad said.

It has been noticed that in 10 cases, 14 persons have fled the country and of these, 6 persons have been declared as Fugitive Economic Offenders and 7 persons have been declared as Proclaimed Offenders, he added.

In cases where persons have fled the country, as of July 25, 2023, assets amounting to Rs 15,805.91 crore have been confiscated and assets amounting to Rs 15,113.02 crore have been restituted to the public sector banks.

Further, he said in respect of loan frauds, the recovery action is initiated through various recovery mechanisms available with banks, such as filing of a suit in civil courts or Debts Recovery Tribunals; action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, through negotiated settlement/compromise etc.

In another reply, Karad said the number of loans sanctioned to borrowers under the Pradhan Mantri Mudra Yojana (PMMY) increased from 5.37 crore in FY22 to 6.23 crore in FY23.

Replying to another question, Karad said the government is making all efforts for the promotion of digital payments across the country, including in remote areas.

Offline digital payment solutions enable further penetration of digital payments in connectivity-constrained areas, he said.

Under the 'Framework for Facilitating Small Value Digital Payments in Offline Mode' offline transactions do not require an additional factor of authentication (AFA) and are subject to a limit of Rs 200 per transaction with an overall limit of Rs 2,000 for all transactions until the balance in the account is replenished.

Replenishment of the used limit is permitted only in online mode with AFA, he added.