PSU banks have witnessed a steep decline in frauds involving an amount of Rs 1 lakh and above in the financial year 2018-19, said Anurag Thakur, Minister of State for Finance and Corporate Affairs, in Lok Sabha. He said that frauds within banks fell to worth Rs 5,149 crore in FY19, and Rs 6,916 in FY18 from whopping Rs 24,291 crore in FY17. According to Anurag Thakur, banking corruption and occurrence of frauds was enabled by a lack of discipline in the financial system and a lax credit culture across various stakeholders. “The role of bankers too was also not as rigorously examined earlier, and auditors were not independently regulated,” said junior minister for finance.
He also said while improved detection and reporting has increased the reported amount involved in recent years, the comprehensive steps taken to check bank frauds have resulted in a declining trend of the bank frauds. “Through extensive reforms, change in credit culture has been instituted and tightened for every stakeholder in the financial system which has enabled a tighter check on corruption and decline in the occurrence of frauds,” Thakur added. The steps taken to check fraudulent banking practices include establishing an online searchable database of frauds reported by banks, in the form of Central Fraud Registry, that has been set up to enable timely identification, control and mitigation of fraud risk and carrying out due diligence during the credit sanction process.
The government had also created Fugitive Economic Offenders Act, 2018 to provide for attachment of property of a fugitive economic offender, and confiscation of such offender’s property with dis-entitlement of the offender from defending any civil claim. Meanwhile, the banks were advised to obtain a certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs 50 crore. Moreover, in order to bring transparency and accountability in the larger financial system, the government has frozen bank accounts of 3.38 lakh inoperative companies.