Huge jump in value, volume of bank frauds in 2017-18: RBI

• The amount involved in bank frauds saw a quantum jump in 2017-18 to Rs 41,000 crore against about Rs 23,000 crore in the previous year, as per Reserve Bank of India’s latest annual report.

• Further, the number of cases on frauds reported by banks, which was generally hovering at around 4,500 in the last 10 years, increased to 5,835 in 2017-18.

• The central bank observed that the quantum jump in the amount involved in frauds during 2017-18 was on account of a large value fraud committed in gem and jewellery sector, mainly affecting one public sector bank (PNB).

• During 2017-18, public sector banks accounted for 92.9 percent of the amount involved in frauds of more than Rs 1 lakh, as reported to the Reserve Bank, while the private sector banks accounted for 6 percent.

• As regards, the cumulative amount involved in frauds till March 31, 2018, PSBs accounted for around 85 percent, while the private sector banks accounted for a little over 10 percent. At the system level, frauds in loans, accounted for more than 75 percent for an amount of Rs 1 lakh and above, while frauds in deposit accounts were at just over 3 percent.

• Within the loan category of frauds, PSBs accounted for a major share (87 percent) followed by the private sector banks (11 percent). RBI said the share of PSBs in frauds relating to ‘off-balance sheet items’ such as Letter of Credit, Letter of Undertaking, and Letter of Acceptance was even higher at 96 percent.

• New private sector banks accounted for more than 20 percent of the frauds related to ‘cash/cheques/clearing’ and ‘foreign exchange transactions’. New private sector and foreign banks accounted for 36 percent each of all cyber frauds reported in debit, credit and ATM cards, among others.

• According to the central bank, one of the major initiatives in recent times in fraud mitigation was the introduction of a Central Fraud Registry, a web-based online searchable database of reported frauds, for the use of banks.

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