FY22 witnessed sharp decline in banking frauds above Rs100 crore

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With banks reporting cases of Rs41,000 crore in 2021–22 compared to Rs 1.05 lakh crore the year before, frauds in the banking sector involving amounts over Rs100 crore have drastically decreased. 118 fraud instances were reported in private and public sector banks in FY22, down from 265 in FY21, according to government data.

According to the report, the total number of fraud cases involving over Rs100 crore in private sector lenders decreased to 38 in FY22 from 98 in FY21, while it decreased to 80 for public sector banks (PSBs). The total amount for PSBs has decreased from Rs65,900 crore in FY21 to Rs28,000 crore. In FY22, the decrease for private sector banks is from Rs39,900 crore to Rs13,000 crore.

The RBI has been taking several actions in an effort to stop fraud, including enhancing the effectiveness of the Early Warning System (EWS) framework, strengthening the governance and response system for fraud, enhancing data analysis for transaction monitoring, and establishing a special Market Intelligence (MI) Unit for frauds.

In cooperation with Reserve Bank Information Technology Private Limited, the Reserve Bank of India (RBI) conducted research on the implementation of the EWS framework in a limited group of Scheduled Commercial Banks during FY22. (ReBIT).

Additionally, machine learning (ML) techniques were used in a few institutions to evaluate the effectiveness of EWS. ABG Shipyard and its promoters were responsible for one of the largest bank frauds in the nation this year, totalling Rs22,842 crore, according to the State Bank of India (SBI).

This case involved Nirav Modi and his uncle Mehul Choksi, who are accused of defrauding the Punjab National Bank (PNB) of around Rs14,000 crore by using phony Letters of Undertaking (LoUs).

The largest bank fraud investigation by the Central Bureau of Investigation (CBI) was completed last month when the agency charged Dewan Housing Finance Ltd (DHFL), its former CMD Kapil Wadhawan, director Dheeraj Wadhawan, and others in a new case totalling Rs34,615 crore.

According to a group of lenders led by Union Bank of India, the company received credit facilities worth Rs42,871 crore from the group between 2010 and 2018 through a variety of agreements, but starting in May 2019, it began missing payments. At various times, banks declared the accounts to be non-performing assets.

The promoters and others were accused by the bank of fraudulently fabricating DHFL’s books, syphoning off and misappropriating a large percentage of the funds, and failing to pay their debts. The 17 banks in the partnership suffered losses of Rs34,615 crore as a result.

Source : https://www.indiainfoline.com/article/news-top-story/fy22-witnessed-sharp-decline-in-banking-frauds-above-rs100-crore-122070400007_1.html

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