WION Web Team New Delhi, India
Aug 29, 2019, 06.59 PM
The Reserve Bank of India on Thursday released its annual report wherein it stated that the number of frauds reported by banks has shot up by 15 per cent in the financial 2018-19 on a year-on-year basis.
The amount involved in such frauds rose by 73.8 per cent, though mostly related to occurrences in earlier years. The banking sector reported 6,801 frauds involving Rs 71,542.93 crore in the financial year 2018-19 as opposed to 5,916 cases involving Rs 41,167.04 crore reported in the previous financial year.
"The average lag between the date of occurrence and its detection by banks was 22 months," while the "average lag for large frauds, i.e. Rs 1 billion and above, amounting to Rs 522 billion reported during 2018-19, was 55 months," the top bank stated in its report which was uploaded on its website.
The bulk of frauds reported in 2018-19 come from bank groups PSBs that constitute the largest market share in bank lending, followed by private sector banks and foreign banks.
"The Reserve Bank would coordinate with various agencies including Ministry of Corporate Affairs to examine the feasibility of interlinking various databases and information systems to improve the system of fraud monitoring and take necessary corrective regulatory and supervisory action," it said.
The RBI, in its report, also enumerated ways to improve the fraud risk management framework for banks.
- It proposed to revise the master directions on frauds to incorporate new instructions in the light of experience gained.
- Conduct workshops on frauds for the bankers based on comprehensive reviews, to sensitise them on fraud prevention, prompt/ accurate reporting and follow up action.
- Create a more user-friendly fraud registry and improve the current system of fraud analytics.
The RBI also proposed to create a mechanism "for sharing of fraud-related information among UCBs on similar lines of CFR that is in place for commercial banks."
It said that the move will "enable the sharing of information on frauds in a timely and uniform manner across the sector".
The amount involved in such frauds rose by 73.8 per cent, though mostly related to occurrences in earlier years, the top bank said in its reports.