The number of cases of frauds reported by banks saw a jump of 15 per cent year-on-year basis in 2018-19, with the amount involved increasing by 73.8 per cent in the year, RBI’s annual report showed.In FY 19,banking sector reported 6,801 frauds involving Rs 71,542.93 crore as against 5,916 cases involving Rs 41,167.04 crore reported in 2017-18.Among bank groups,Public Sector Banks (PSB), which constitute the largest market share in bank lending, have accounted for the bulk of frauds reported in 2018-19. It was followed by private sector banks and foreign banks.
In the reporting year, state-run banks reported 3,766 cases of frauds worth Rs 64,509.43 crore as against 2,885 cases involving Rs 38,260.8 crore.The report said that the average lag between the date of occurrence andits detection by banks was 22 months.
“The average lag for large frauds, i.e. Rs 100 crore and above, amounting to Rs 52,200 crore reported during 2018-19, was 55 months,” it said.
In terms of area of operations, frauds related to advances constituted the preponderant share of the total amount involved in frauds in 2018-19, while the share of frauds in off-balance sheet items declined from ayear ago.
Number of frauds related to advances were predominant followed by card/internet related frauds and deposits related frauds, the report said.
Frauds relating to card/internet and deposits constituted only 0.3 per cent of the total value of frauds in 2018-19.
Cheating and forgery was the major component, followed bymisappropriation and criminal breach of trust. Fraud cases involving an amountof less than 1 lakh (i.e., small value frauds) were only 0.1 per cent of thetotal amount involved in 2018-19, the report showed.
RBI said it would coordinate with various agencies includingthe ministry of corporate affairs to examine the feasibility of interlinkingvarious databases and information systems to improve the system of fraudmonitoring and take necessary corrective regulatory and supervisory action.
To improve the fraud risk management framework for banks,the apex bank will revise the master directions on frauds to incorporate newinstructions in the light of experience gained, will conduct workshops onfrauds for the bankers based on comprehensive reviews, to sensitise them onfraud prevention, prompt/ accurate reporting and follow up action.
Fraud registry will be made more user-friendly and fraudanalytics will also be improved, it said.