Banks lose Rs70,000crore due to frauds in last 3 fiscals

New Delhi: Indian banks reported a total loss of about Rs 70,000 crore due to frauds during the last three fiscals up to March 2018, the Rajya Sabha was informed on Tuesday.

The extent of loss in fraud cases reported by scheduled commercial banks (SCBs)for 2015-16, 2016-17 and 2017-18 was Rs16,409 crore, Rs16,652 crore and Rs 36,694 crore, respectively, Minister of State for Finance Shiv Pratap Shukla said in a written reply quoting RBI data. The minister said that data of frauds is as per the year of reporting and not the year of occurrence of fraud or sanction of loan, letter of undertaking, which may might be of an earlier period.

The minister also informed the House that gross advances by SCBs increased from Rs 25.03 lakh crore as on March 31, 2008, to Rs 68.75 lakh crore on March 31, 2014.

As regards the stressed assets in the banking system, Shukla said the spurt was due to aggressive lending practices, wilful default, loan frauds, corruption in some cases and economic slowdown. Replying to another question, he said as per RBI data, there were 139 borrowers with aggregate gross NPAs of more than Rs1,000 crore. Shukla said the RBI has apprised that it issued directions to banks in June 2017, instructing them to file applications for initiation of corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code (IPC) in respect of 12 borrowers.

Illustration: Mansoor Naqvi

The 12 borrowers had cumulative fund-based and non-fund based outstanding amount of Rs 1,97,769 crore as on March 31, 2017.

“It subsequently issued further directions to banks advising them to finalise and implement resolution plans in respect of 29 accounts by December 13, 2017, failing which these too had to be referred to CIRP under IBC,” Shukla said.

The cumulative fund-based and non-fund based outstanding amount of these accounts was Rs1,35,846 crore, as on June 30, 2017.

PNB posts consecutive quarterly loss on fraud-related provisions

Punjab National Bank reported a second straight quarterly loss on Tuesday as it earmarked more funds to cover a massive fraud, but expects faster bad loan recovery to help it return to a profit for the full year.
PNB, in February said it had been defrauded by two jewellery groups which raised more than $2 billion in credit overseas using fake guarantees provided by the bank’s staff in Mumbai.
The bank is taking every possible measure “so that we can bounce back in the shortest possible time,” Chief Executive Sunil Mehta told a news conference, outlining steps for boosting recovery of bad loans, conservation of capital and further capital increase via the sale of non-core assets and stakes in units.
The net loss of Rs9.40 billion for first fiscal quarter to June 30 was smaller than Rs134.17 billion loss reported in previous quarter.

(With agency inputs)