Banks lose Rs 16,770 crore in FY17, owing to frauds
DSIJ Intelligence / 04 Jul 2017
The Reserve Bank of India (RBI) released its financial stability report (FSR) on June 30,2017 which showed that the frauds in the banking system have been increasing substantially at alarming rates, both in volume as well as value terms.
The Reserve Bank of India (RBI) released its financial stability report (FSR) on June 30,2017 which showed that the frauds in the banking system have been increasing substantially at alarming rates, both in volume as well as value terms.
The report reveals that in the last five years, the volume of fraud up by 19.6 per cent to 5,064 crore from 4,235 crore and the value (loss incurred) rise by 72 per cent to Rs 16,770 crore in FY17 against Rs 9,750 crore.
As per the report, in value terms about 86 per cent of frauds reported in the FY17 were the frauds in advances or loan portfolio.
Some of the reasons for the gaps arises are the liberal cash flow (at the proposal stage), lack of continuous monitoring of cash flows and EBITDA, lack of security perfection and overvaluation, gold plating of projects, diversion of funds, double financing and general credit governance issues in banks.
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