The number of frauds reported by banks in 2018-19 increased 15 per cent on a year-on-year basis to 6,801 cases from 5,916 cases a year ago. And, the total amount involved in the frauds was to tune of Rs 71,542.93 crore in 2018-19 as compared to Rs 41,167.04 crore in 2017-18, a 73.8 per cent increase.
The public sector banks accounted for 90.2 per cent of the amount that was involved in fraud in 2018-19, while the private sector banks accounted for 7.7 per cent, and the foreign banks accounted for 1.3 per cent. In terms of the number of frauds, share of public sector banks is 55.4 per cent, private banks 30.7 per cent share, and foreign banks 11.2 per cent.
The average time gap in the date of occurrence of fraud and its detection was 22 months, the RBI said in its annual report. However, the average lag for frauds for amount involving more than Rs 100 crore, amounting to Rs 52,200 crore, was 55 months.
Also, frauds relating to loans accounted for 90 per cent of the share followed by off-balance sheet items and foreign exchange transactions. Frauds related to off balance sheet saw a huge decline in 2018-19 as it constituted 39.6 per cent of the frauds in 2017-18. In 2018-19, it was merely 7.7 per cent.
“In terms of the number of frauds, too, those related to advances were predominant followed by card/internet-related frauds and deposits-related frauds. Frauds relating to card/internet and deposits constituted only 0.3 per cent of the total value of frauds in 2018-19,” the RBI said.
In order to detect the frauds sooner, the RBI is co-coordinating with various agencies, including the Ministry of Corporate Affairs, to examine the viability of interlinking various databases and information systems so that the system of monitoring frauds is improved.
Also, to improve the fraud risk management framework for banks, master directions on frauds will be revised to incorporate new instructions in the light of experience gained, the RBI said. Moreover, the RBI will conduct workshops for the bankers based on comprehensive reviews, to sensitise them on fraud prevention, prompt reporting and follow up action.
The fraud registry will also be made more user-friendly and fraud analytics will be improved. The RBI has also proposed to create a mechanism for sharing of fraud-related information among urban co-operative banks on similar lines of central fraud registry that is in place for commercial banks. “This will enable sharing of information on frauds in a timely and uniform manner across the sector,” the RBI said.