New Delhi | The government on Tuesday cleared that Reserve Bank of India’s data on bank frauds was listed according to year of reporting in media not by the year their occurrence. “RBI data on frauds reported to it by banks has been cited in sections of the media to paint a picture of rising frauds in banks in recent years. The fact is that this data is by the year of reporting and not the year of occurrence of the fraud or sanction of loan, Letter of Undertaking etc., which in many cases is of an earlier period,” the Finance Ministry said in clarification here.
The clarification comes in wake of the Congress demand for a White paper acknowledging the ‘sinking economy’ and take steps to recover the banking sector from this problem. The Ministry said occurrence of frauds was enabled due to laxity in the financial system which has been systematically dealt with through comprehensive banking reforms instituted by the Government to address underlying causes and provide for proactive checking for and detection of frauds.
For the purpose, the government has issued instruction that all accounts exceeding Rs 50 crore, if classified as NPAs, be examined by banks from the angle of possible fraud. In addition, public sector banks (PSBs) have also been advised to seek a report on the borrower from the Central Economic Intelligence Bureau, in case an account turns NPA.
Proactive action has been taken against wilful defaulters, with FIRs being registered by PSBs against 2,881 wilful defaulters. For enforcement of auditing standards and ensuring the quality of audits, the government has established National Financial Reporting Authority as an independent regulator. The government has also enacted the Fugitive Economic Offenders Act, 2018 to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts.
Besides, pursuant to Government’s advice to PSBs, they have been obtaining certified copy of passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs 50 crore, and are ensuring rotational transfer of officials/employees on sensitive posts.
Earlier in the day, the Congress demanded that the NDA Government come out with a White paper acknowledging the ‘sinking economy’ and take concrete steps to pull out the banking sector from this mess. Talking to reporters here, AICC spokesperson Jaiveer Shergill said, “the latest RBI data reveals that over 6,800 cases of bank fraud involving an unprecedented Rs 71,500 crore have been reported in 2018-19 alone.
The RBI data has revealed that 27,125 cases of bank frauds of a whopping Rs 1.74lakh crore (Rs 1,74,753cr) were reported in the past five years in various banks. The Ministry added that this was also clarified in the Rajya Sabha on January 1, 2019.