In pandemic year, bank frauds down 25% by value: RBI annual report

In terms of number, fall is 15%; share of PSBs in cases declines

Banks and other financial institutions reported frauds worth Rs 1.38 trillion in 2020-21, down 25 per cent compared to the previous year, when the amount involved was Rs 1.85 trillion, according to the Reserve Bank of India’s (RBI’s) annual report released on Thursday.
 
In terms of number, these entities reported 15 per cent fewer frauds in 2020-21, at 7,363, compared to the previous year’s 8,703 cases.
 
The RBI data takes into account frauds of Rs 1 lakh and above only. Also, the central bank has changed its accounting year to April-March from July-June, and hence the latest report only covers nine months (July 2020-March 2021).
 
In 2019-20, the total fraud cases involving Rs 1 lakh and above had shot up by 28 per cent by volume and 159 per cent by value.
 
The RBI data suggests that the share of public sector banks in frauds, both in terms of number and value, has fallen, while that of private sector banks increased in the corresponding period.
 
Furthermore, most frauds are occurring in the loan portfolio of financial institutions, the report says. In 2020-21, the loan portfolio saw 47.5 per cent of the frauds in terms of number and 99 per cent in terms of the amount involved.

 
“Though the value of frauds reported in the advances category for 2020- 21, in percentage terms, remained almost the same as compared to the last year, the incidence of frauds in the advances category, in terms of number, has come down over the previous year,” the report stated. Also, the share of the off-balance sheet (in terms of value) has been decreasing since 2018-19.
 
“The average time lag between the date of occurrence of frauds and the date of detection was 23 months for the frauds reported in 2020-21. However, in respect of large frauds of Rs 100 crore and above, the average lag was 57 months for the same period,” the RBI said.
 
Recently, it was reported that cumulatively, banks in India suffered frauds worth Rs 4.92 trillion as of March 31, 2021, or nearly 4.5 per cent of the total bank credit. This was based on RBI data, which was sought under the Right to Information Act by Saurabh Pandhare. The data showed 90 banks and financial institutions reported a total of 45,613 cases of loan fraud till March 31, 2021.
 
Also, the RBI report said there was an increase of 31.3 per cent in counterfeit notes detected in the denomination of Rs 500 (Mahatma Gandhi (new) series) in 2020-21 compared to the previous year. However, there was a decline in counterfeit notes detected in other denominations.