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Mangaluru-based Corporation Bank has reported 199 fraud cases totalling Rs 1,318 crore in FY16. This represented an increase in the size over the previous year and the number amounted to over double the net loss reported by the lender this year.
Institutional Investor Advisory Services (IiAS) has expressed concerns over internal financial controls at the bank. It also noted that the auditors did not report anything adverse despite the large number.
“Shareholders to note that Corporation Bank reported Rs 1,220 crore of frauds in FY15 and Rs 1,320 crore of frauds in FY16. However, the auditors have not reported anything adverse on the internal controls of the bank,” IiAS said ahead of the bank’s annual general meeting next week. “Shareholders must engage with the management to understand the cause for such large occurrences of fraud and action being taken to minimise such frauds in the future,” IiAS added.
The bank had slipped into red in FY16, reporting a net loss of Rs 506 crore compared to a net profit of Rs 584 crore in the previous year. According to the annual report, during the year, 199 cases of frauds involving Rs 1,318 crore were reported to the central bank, with an outstanding balance of Rs 1,093 crore as on March 31. During the year, the bank made a provision of Rs 801 crore and balance Rs 292 crore was debited to 'other reserves' based on directives of the central bank in this regard.
Chairman and managing director, Jai Kumar Garg, did not respond to an e-mail seeking comments on the rising number of frauds in the bank.
Garg chairs an internal committee comprising six directors to monitor large frauds. The committee met eight times in the last financial year, the annual report said.
In May, the bank had registered a case with Delhi police, where it had reported that several companies, with fictitious addresses, had taken loans amounting to several crores of rupees and were now untraceable.
The Mangaluru-based lender is not alone. The total amount reportedly stuck in fraud-related bad-loan cases jumped from Rs 5,591 crore in 2013-14 to Rs 12,935 crore in 2015-16, according to data given by finance ministry to the Lok Sabha during the Budget session.
The number of cases of loans given on the basis of forged documents or cheating increased steadily from 1,520 in 2013-14 to 1,651 in the next year and 1,704 in 2015-16.
