Comprehensive steps taken to curb fraud in public sector banks (PSBs) have resulted in a sharp decline in the amount involved, from ₹50,329 crore in 2013-14 to just ₹3,781 crore in the first three quarters of 2019-20, according to the Finance Ministry.
An online searchable database of frauds reported by banks , in the form of Central Fraud Registry, has been set up to enable timely identification, control and mitigation of fraud risk and for carrying out due diligence during the credit sanction process, the Ministry said in response to a question in the Lok Sabha.
The Fugitive Economic Offenders Act is being invoked to attach and confiscate the assets of violators and strip them of the entitlement to defend any civil claim.
Copies of passports
The PSBs have been told to get certified copies of passports of promoters and directors and other authorised signatories of companies availing themselves of loan facilities of more than ₹50 crore. They also have been advised to decide on publishing photographs of wilful defaulters as per procedure.
The government has also asked these banks to strictly ensure rotational transfer of officials to mitigate the possibility of their involvement in any fraud. The bank heads have been empowered to issue requests for opening look-out circulars against suspects.
“For enforcement of auditing standards and ensuring the quality of audits, the government has established the National Financial Reporting Authority as an independent regulator... bank accounts of 3.38 lakh inoperative companies have been frozen,” said the government.
To another question, the Ministry said gross Non-Performing Assets (NPA) of nationalised banks, as per the Reserve Bank of India data on global operations, rose from ₹1,92,809 crore as on March 31, 2015, to ₹6,16,586 crore as on March 31, 2018.
“As a result of the government’s strategy of recognition, resolution, recapitalisation and reforms,” the NPAs declined (as per declared results of nationalised banks) to ₹5,56,991 crore as on December 31, 2019.
The nationalised banks have recovered ₹3,08,370 crore over the last five financial years and the first three quarters of the current financial year, which includes a record recovery of ₹86,014 crore during 2018-19.
The Ministry, in reply to another question, said over 21,000 instances of fraud related to ATMs, debit/credit cards and Internet banking, involving about ₹128 crore, were reported by the scheduled commercial banks and select financial institutions from October to December 2019.
While ATM/debit card frauds to the tune of ₹73.65 crore were reported in October, it averaged about ₹10 crore in November and December last year.