Skip to main content

RBI data on bank frauds based on reporting year, not occurrence date: Govt

The ministry said proactive measures undertaken by the government in past few months have led to increase in detection and reporting of bank frauds
The finance ministry on Tuesday said there has been no rise in bank frauds in recent years, and an RBI reply to an RTI query on the issue pertained to the year in which the frauds were reported and not the year when they occurred. The Reserve Bank of India (RBI) in an RTI reply had disclosed that over 6,800 cases of bank fraud involving an unprecedented Rs 71,500 crore were reported in 2018-19 as against a total of 5,916 such cases in 2017-18 involving Rs 41,167.03 crore. "The fact is that this data is by the year of reporting and not the year of occurrence of the fraud or sanction of loan, letter of undertaking etc, which in many cases is of an earlier period," the finance ministry said in a statement.
The RBI data on frauds reported to it by banks has been cited in sections of the media to paint a picture of rising frauds in banks in recent years, the ministry said. The ministry said proactive measures undertaken by the government in past few months have led to increase in detection and reporting of bank frauds. Occurrence of fraud, it said, was enabled by laxity in the financial system which has been systematically dealt with through comprehensive banking reforms initiated by the government to address underlying cases and provide for proactive checking for and detection of frauds.
Citing some of the key initiatives taken by the government, the statement said banks were asked to examine all NPA accounts over Rs 50 crore from possible fraud angle and proactive action were taken against wilful defaulters, with FIRs being registered by PSBs against 2,881 wilful defaulters. In addition, public sector banks (PSBs) were advised to seek a report on the borrower from the Central Economic Intelligence Bureau, in case an account turns NPA, it said, adding, rotational transfer of officials/employees on sensitive posts were also undertaken.
For enforcement of auditing standards and ensuring the quality of audits, the government has established National Financial Reporting Authority as an independent regulator. Besides, the government enacted Fugitive Economic Offenders Act, 2018 in order to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts. The law was enacted in aftermath of Vijay Mallya and Nirav Modi episode to put a check on these kind of incidences.
Business Standard, 05th June 2019

Comments

Popular posts from this blog

April GST collections at new high despite rate rationalisation in December

Goods and services tax (GST) collection touched a record high in April, exceeding Rs 1 trillion for the third time in four months. The mop-up was 10 per cent higher over the previous year. Gross collection for the month was Rs 1.13 trillion, said the finance ministry. Despite the recent rate rationalisation in December, a rise in collection was reported. Of the total collected, the CGST (central GST) contributed Rs 21,163 crore, the SGST (state GST) Rs 28,801 crore, the IGST (integrated GST) Rs 54,733 crore (including Rs 23,289 crore on import) and cess Rs 9,168 crore (including Rs 1,053 crore on import). After settlement of the IGST and the balance IGST in a 50:50 ratio between the Centre and states on a provisional basis, the CGST stood at Rs 47,533 crore and SGST at Rs 50,776 crore. The CGST target in the Union Budget for 2019-20 is Rs 6.1 trillion. “The April collection indicates the tax base is increasing gradually, with GST getting stabilised with measures such as e-way bills and…

Defaults are Costly: Bankruptcy Law Gives Lenders More Teeth

Lenders can bargain strongly on asset recovery, defaulting borrowers can lose control of co With the Bankruptcy Act in place, banks can breathe easy, at least in the medium term, as corporate borrowers will now intensify their efforts to avoid loan defaults and the likely loss of management control of business, said Moody's Investors Service. This will empower lenders to bargain strongly in matters of asset recovery, while borrowers can gain with lower borrowing costs after three-four quarters. “The (defaulting) borrowers will lose control of the company as soon as the process is initiated,“ Srikanth Vadlamani, vicepresident, Financial Institutions Group, Moody's Investors Service, told ET from Singapore.“This, in itself, should act as a key incentive for them not to default in the first place.“ A few weeks ago, the government passed the Bankruptcy Bill, introducing a time-bound settlement process against loan default. With the Bankruptcy Act, the resolution process-from the date …

SC order on RBI circular: More options for banks to tackle defaulting firms

Lenders also have the option of restructuring the loans Lenders to companies which are under stress could now have three options to deal with them if they default on loans: take a haircut as part of a one-time settlement, restructure the loans for a longer tenure as they did when corporate debt restructuring schemes were allowed, or go to the Insolvency and Bankruptcy Code (IBC) for redress. These changes in the options available to lenders come, according to PE funds and bank lawyers who are involved in the IBC process, in the wake of the Supreme Court on Tuesday setting aside the 12 February RBI circular, which allowed a 180-day window to banks to resolve a company default.But they can still find a resolution. According to a Reserve Bank of India circular, a loan becomes a non-performing asset when banks cannot find a way of recovering their money in 90 days. In short, banks still have a window to resolve the default. Lenders can take a haircut as part of a one -time settlement of du…