Press Information Bureau 
Government of India
Ministry of Finance

23-July-2019 17:34 IST

Loans to Good Tax Payers

The Government has taken comprehensive steps to reduce the incidence of frauds in banks. The steps taken include, inter-alia, the following:

  • Government has issued “Framework for timely detection, reporting, investigation relating to large value bank frauds” to Public Sector Banks (PSBs), for systemic and comprehensive checking of legacy stock of their non-performing assets (NPAs), which provides, inter-alia, that—

(i) all accounts exceeding Rs. 50 crore, if classified as NPAs, be examined by banks from the angle of possible fraud, and a report placed before the bank’s Committee for Review of NPAs on the findings of this investigation;

(ii) examination be initiated for wilful default immediately upon reporting fraud to RBI; and

(iii) report on the borrower be sought from the Central Economic Intelligence Bureau in case an account turns NPA.

  • Fugitive Economic Offenders Act, 2018 has been enacted to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts. The act provides for attachment of property of a fugitive economic offender, confiscation of such offender’s property and disentitlement of the offender from defending any civil claim.
  • PSBs have been advised to obtain certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs. 50 crore and, decide on publishing photographs of wilful defaulters, in terms of Reserve Bank of India (RBI)’s instructions and as per their Board-approved policy and to strictly ensure rotational transfer of officials/employees. The heads of PSBs have also been empowered to issue requests for issue of Look Out Circulars.
  • For enforcement of auditing standards and ensuring the quality of audits, Government has established the National Financial Reporting Authority as an independent regulator.
  • Instructions/advisories have been issued by Government to PSBs to decide on publishing photographs of wilful defaulters, in terms of RBI’s instructions and as per their Board-approved policy, and to obtain certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs. 50 crore.
  • In order to bring transparency and accountability in the larger financial system, bank accounts of 3.38 lakh inoperative companies were frozen over the last two financial years.

The impact of the above steps is reflected in RBI’s Financial Stability Report (FSR) of June 2019. As per FSR, systemic and comprehensive checking of legacy stock of NPAs of PSBs for frauds has helped unearth frauds perpetrated over a number of years. Details of the number of cases and amount involved in frauds of Rs. 1 lakh and above that occurred during the last three financial years (FYs), reported by Scheduled Commercial Banks (SCBs), as per inputs received from RBI, are as under:

FY of occurrence Number of cases Amount  involved (in crore Rs.)
2016-17 3,927 25,884
2017-18 4,228  9,866
2018-19 2,836  6,735

While repayment capacity and applicant’s liabilities, including tax liabilities, are relevant for such appraisal and assessment, processing of applications for appraisal, assessment, sanction and disbursement is also dependent upon availability of requisite details and documents to enable the bank to arrive at a decision in its commercial judgement with due regard to the technical feasibility and economic viability of the proposal and the creditworthiness of the applicant, in accordance with the bank’s Board-approved loan policy. Upon receipt of loan applications with requisite details and documents in support of technical feasibility and economic viability of the proposal and creditworthiness and repayment capacity of the applicant, banks appraise and assess the same for a decision regarding sanction and disbursement.

This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairs in a written reply to a question in Rajya Sabha today.

*****

Annex

Details of frauds as reported by Scheduled Commercial Banks and select Financial Institutions based on date of occurrence (amount involved Rs. 1 lakh and above), primarily in loan accounts sanctioned during previous years

Amounts in crore Rs.
Bank
Category
FY 2016-17
FY 2017-18
FY 2018-19
 
Number of Frauds
Amount Involved
Number of Frauds
Amount Involved
Number of Frauds
Amount Involved
 
Aditya Birla Idea Payments Bank Limited
Payments Bank
           24
       1.45
Comprehensive measures have been taken to prevent frauds including directions to banks to examine all NPA accounts above Rs. 50 crore from the angle of possible fraud, initiation of criminal proceedings, enactment of Fugitive Economic Offenders Act 2018, creation of Central Fraud Registry, empowering heads of Public Sector Banks to request for issue of Look Out Circular, establishment of the National Financial Reporting Authority, straight-through processing between Core Banking System and SWIFT and instituting in PSBs the system of obtaining certified copies of passport of promoters/directors of companies availing of loans exceeding Rs. 50 crore.
Comprehensive measures have been taken to prevent frauds including directions to banks to examine all NPA accounts above Rs. 50 crore from the angle of possible fraud, initiation of criminal proceedings, enactment of Fugitive Economic Offenders Act 2018, creation of Central Fraud Registry, empowering heads of Public Sector Banks to request for issue of Look Out Circular, establishment of the National Financial Reporting Authority, straight-through processing between Core Banking System and SWIFT and instituting in PSBs the system of obtaining certified copies of passport of promoters/directors of companies availing of loans exceeding Rs. 50 crore.
Comprehensive measures have been taken to prevent frauds including directions to banks to examine all NPA accounts above Rs. 50 crore from the angle of possible fraud, initiation of criminal proceedings, enactment of Fugitive Economic Offenders Act 2018, creation of Central Fraud Registry, empowering heads of Public Sector Banks to request for issue of Look Out Circular, establishment of the National Financial Reporting Authority, straight-through processing between Core Banking System and SWIFT and instituting in PSBs the system of obtaining certified copies of passport of promoters/directors of companies availing of loans exceeding Rs. 50 crore.
Allahabad Bank
Public Sector Bank
           63
   1,398.19
           11
     40.77
           12
    509.67
American Express Banking Corporation
Foreign Bank
         167
         7.07
         332
       9.56
         190
       6.30
Andhra Bank
Public Sector Bank
           36
       75.82
           37
    880.11
           11
    193.51
AU Small Finance Bank Limited
Scheduled Small Finance Bank
            1
         1.45
            4
       0.25
            5
       0.35
Axis Bank Limited
Private Sector Bank
         217
     666.34
         231
    691.78
         195
    670.40
Bandhan Bank Limited
Private Sector Bank
           24
         1.51
           21
       1.22
            6
       0.91
Bank of America, National Association
Foreign Bank
            1
         0.01
           16
       0.36
            9
       0.23
Bank of Bahrain and Kuwait B.S.C.
Foreign Bank
            2
         0.23
Bank of Baroda
Public Sector Bank
         140
   1,723.83
           84
    695.29
           32
    797.12
Bank of India
Public Sector Bank
           95
     978.54
           99
 1,247.63
           52
     43.64
Bank of Maharashtra
Public Sector Bank
           34
     391.29
           32
 1,004.86
           38
    791.31
Bank of Nova Scotia
Foreign Bank
            1
         0.13
Canara Bank
Public Sector Bank
           48
     229.95
           50
     97.85
           24
       2.48
Catholic Syrian Bank Limited
Private Sector Bank
            9
         7.88
           25
    118.02
            8
       0.70
Central Bank of India
Public Sector Bank
           59
     153.85
           56
     11.08
           45
       2.53
Citibank N.A.
Foreign Bank
         189
         8.79
         203
       8.81
         168
       4.88
City Union Bank Limited
Private Sector Bank
            3
         4.38
           10
     48.30
            1
       0.25
Cooperatieve Rabobank U.A.
Foreign Bank
            2
     61.53
Corporation Bank
Public Sector Bank
           52
     123.46
           12
     97.13
            5
       0.05
DBS Bank Ltd.
Foreign Bank
            2
     116.82
            3
       0.13
DCB Bank Limited
Private Sector Bank
            2
         0.11
            8
       1.51
            7
     33.17
Dena Bank
Public Sector Bank
           24
       40.25
           11
    232.57
            3
       2.71
Deutsche Bank AG
Foreign Bank
            8
       0.13
            3
       0.04
Doha Bank QSC
Foreign Bank
            1
         2.76
Equitas Small Finance Bank Limited
Scheduled Small Finance Bank
            4
         0.19
           17
       2.18
            7
       0.35
ESAF Small Finance Bank Limited
Non-Scheduled Small Finance Bank
            4
       0.18
            2
       0.05
Export Import Bank of India
National Financial Institution
            2
     183.98
            1
     81.91
Federal Bank Limited
Private Sector Bank
           15
       12.36
           28
       3.09
            9
     26.46
Fincare Small Finance Bank Limited
Non-Scheduled Small Finance Bank
            2
       0.05
           13
       0.48
Fino Payments Bank Limited
Payments Bank
            3
       0.90
           13
       0.64
Firstrand Bank Limited
Foreign Bank
            1
         0.02
HDFC Bank Limited
Private Sector Bank
         312
       42.21
         330
     54.39
         273
    425.20
Hongkong and Shanghai Banking Corporation Limited
Foreign Bank
           45
         0.94
         298
       6.51
         178
       3.26
ICICI Bank Limited
Private Sector Bank
         528
       35.13
         530
    851.44
         374
     25.84
IDBI Bank Limited
Private Sector Bank
           91
     989.98
           94
     99.84
           99
     59.22
IDFC Bank Limited
Private Sector Bank
            3
         0.39
            1
       0.02
           10
     41.90
Indian Bank
Public Sector Bank
           70
       59.45
           47
    133.66
           20
       2.92
Indian Overseas Bank
Public Sector Bank
           53
   1,115.98
           34
    372.08
           30
 2,272.89
IndusInd Bank Limited
Private Sector Bank
           16
         1.68
           36
    109.59
           51
       9.40
Jammu and Kashmir Bank Limited
Private Sector Bank
            9
         2.69
            3
    176.17
Jana Small Finance Bank Limited
Non-Scheduled Small Finance Bank
           13
         1.16
           14
       0.98
           19
       0.74
Karnataka Bank Limited
Private Sector Bank
            4
       87.26
           11
     21.55
            2
       0.03
Karur Vysya Bank Limited
Private Sector Bank
           20
       24.26
           22
     30.84
            7
       2.66
KEB Hana Bank
Foreign Bank
            2
         0.02
Kotak Mahindra Bank Limited
Private Sector Bank
         125
       51.11
         275
     12.44
         338
       9.19
Krishna Bhima Samruddhi Lab Limited
Non Scheduled Local Area Bank
            1
         0.02
Lakshmi Vilas Bank Limited
Private Sector Bank
           52
       95.34
           38
    116.94
           43
    127.27
Nainital Bank Limited
Private Sector Bank
            6
         0.48
            1
       0.31
North East Small Finance Bank Limited
Non-Scheduled Small Finance Bank
            1
       0.18
Oriental Bank of Commerce
Public Sector Bank
           42
     301.96
           24
     36.82
            8
     24.89
Paytm Payments Bank Limited
Payments Bank
            2
       0.02
PT Bank Maybank Indonesia TBK
Foreign Bank
            1
       17.78
Punjab and Sind Bank
Public Sector Bank
           22
     117.07
            3
       2.19
 –
Punjab National Bank
Public Sector Bank
         101
 14,734.52
         108
    324.83
           33
    264.79
RBL Bank Limited
Private Sector Bank
           14
         1.66
           18
       8.67
           12
       2.12
SBM Bank (Mauritius) Limited
Foreign Bank
            2
     72.53
            1
    144.95
Small Industries Development Bank of India
National Financial Institution
            5
       16.11
            8
     62.31
            1
       5.08
South Indian Bank Limited
Private Sector Bank
            8
       62.83
           16
     20.28
           19
       5.32
Standard Chartered Bank
Foreign Bank
         314
         8.31
           86
     58.09
           48
       2.91
State Bank of Bikaner and Jaipur
Public Sector Bank
            5
         0.24
 –
State Bank of Hyderabad
Public Sector Bank
            6
         7.65
 –
State Bank of India
Public Sector Bank
         469
     444.28
         618
    294.56
         236
     59.69
State Bank of Mysore
Public Sector Bank
           12
         4.24
 –
State Bank of Patiala
Public Sector Bank
            6
         0.45
 –
State Bank of Travancore
Public Sector Bank
           15
         0.67
 –
Subhadra Local Area Bank Limited
Non Scheduled Local Area Bank
            1
         0.01
 –
Suryodaya Small Finance Bank Limited
Scheduled Small Finance Bank
            5
         0.25
            7
       0.13
 –
Syndicate Bank
Public Sector Bank
         127
     133.81
           78
    613.42
           27
     84.24
Tamilnad Mercantile Bank Limited
Private Sector Bank
           18
       63.41
           31
     78.27
           14
     25.60
The Bank of Tokyo-Mitsubishi UFJ Limited
Foreign Bank
            1
         1.24
            1
       0.19
            1
       0.03
The Dhanalakshmi Bank Limited
Private Sector Bank
            3
         0.20
            6
     68.81
            3
       4.59
The Industrial Finance Corporation of India Limited
National Financial Institution
            1
       23.92
 –
UCO Bank
Public Sector Bank
           31
     233.77
           41
    103.25
           27
       2.89
Ujjivan Small Finance Bank Limited
Scheduled Small Finance Bank
           15
         0.31
           11
       0.23
            7
       0.33
Union Bank of India
Public Sector Bank
           83
     612.74
           69
    480.03
           15
     29.08
United Bank of India
Public Sector Bank
           29
     402.85
           15
       2.22
           20
       4.60
Utkarsh Small Finance Bank Limited
Scheduled Small Finance Bank
            5
         0.22
            8
       0.31
            4
       0.06
Vijaya Bank
Public Sector Bank
           32
       16.58
           22
    145.96
            2
       0.94
Yes Bank Limited
Private Sector Bank
           14
       39.61
           15
    169.30
           26
       2.01

Source: RBI

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