Categories: Banking

Bank frauds over 50% in Public Sector Banks according to RBI data

Bank frauds over 50% in Public Sector Banks

According to an RBI report, public sector banks (PSBs) accounted for the majority of frauds reported in 2018–19, with 55.4% of the cases reported and 90% of the money involved. This is primarily due to an inadequate internal process, lack of personnel, and inadequate systems to address operational risks.

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Bank frauds over 50% in Public Sector Banks: Key Points

Private banks and foreign banks contributed 30,7% and 11.2 percent, respectively, to the total number of frauds, while contributing 7.7 percent and 1.3 percent, respectively, to the latter.
According to the Reserve Bank of India’s “Trend and Progress of Banking in India 2018-19” report, PSBs contributed even more to big frauds in 2018–19, accounting for 91.6% of their total value.
The loan portfolio has seen the highest percentage of frauds, both in terms of quantity and dollar amount.
The value of incidents involving various aspects of banking, such as card/internet, off-balance sheet, and foreign exchange transactions, has decreased (in terms of reporting date) in 2018–19 compared to the previous year.

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Large Value Bank Frauds

Large value frauds, which comprise 86.4 percent of all reported frauds during the year in terms of value, typically involved borrowers diverting money through associated or shell companies, accounting irregularities, manipulating financial or stock statements, opening current accounts with banks outside the lending consortium without receiving lender approval, and devolving Letters of Credit (LCs).

The report summarizes the financial results of the banking industry, including cooperative banks, for the first half of 2018–19 and the first half of 2019–20 (until June 30).

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