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June 27, 2018

Public Sector Banks account for 85% of Frauds : RBI

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In it's recently released Financial Stability Report 2018, the Reserve Bank of India (RBI) announced that the Public Sector Banks (PSBs) accounted for a staggering 85 per cent of nearly 6,500 fraud cases, amounting to more than Rs 30,000 crore.

Top 10 banking frauds in 2018 alone lead to a financial loss of Rs 10,000 crore. Banks had reported nearly 5,000 frauds amounting to Rs 20,000 crore in fiscal year 2017.

In recent years, frauds reported (For more than Rs 1 lakh) in the Indian banking sector show an increasing trend both in terms of number and quantum. In terms of the relative share of frauds, PSBs have a disproportionate share (more than 85 per cent) significantly exceeding their relative business share,” the RBI report said.

While the bulk of the total frauds were loan related, card and internet banking frauds also contributed to the sharp rise, alluding to the underlying vulnerability of technology-based delivery channels.

The Financial Stability Report (FSR) also highlighted that fraud reported in PSBs under prompt corrective action (PCA) is in excess of their relative share in credit.

The report also pointed to significant information asymmetry between external auditors and internal stakeholders, and its consequences on the quality of internal oversight. 

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