M K Shukla & Rakesh Ranjan
Unpublished data of the Reserve Bank of India (RBI), which British wire agency Reuters obtained through a right-to-information request, shows State-run banks have reported 8,670 "loan fraud" cases totaling Rs 612.6 billion ($9.58 billion) over the last five financial years through March 31, 2017.
Earlier, Indianmandarins had reported about the possibility of huge fraud in agriculture loans that have starved genuine agriculturists of much-needed funds.
In fact, the numbers of loan fraud cases across India could be even higher since they only include cases involving only loans of Rs 100,000 or more reported to the RBI.
And yet, there has been no movement in the government to go for the whole hog reforms of the PSBs to avoid and prevent frauds like the one committed by Nirav Modi and Vijay Mallya. This has badly exposed the NaMo administration to worst kind of ridicule and taunts from habitual thugs and Pindaris who adorn the top echelons of India's major political parties.
As bad loans surged to a record peak of nearly $149 billion last year, the government should have woken up then and there and initiated at least the measures to reform the archaic lending process. In June 2017, the RBI, in its Financial Stability Report, called frauds in banks and financial institutions "one of the emerging risks to the financial sector."
Along with bad loans, bank loan frauds have also steadily increased reaching Rs 176.34 billion in the last financial year from Rs 63.57 billion in 2012-13, according to the data, which doesn't include the PNB case.
Punjab National Bank, India's second-largest State lender said on Wednesday, February 14, that two junior officers at a single branch had illegally steered $1.77 billion in fraudulent loans to companies, most of them controlled by billionaire jeweler Nirav Modi. It is considered India's biggest fraud ever.
"This might be the tip of the iceberg or the middle, and that is the worry," said Pratibha Jain, a partner at law firm Nishith Desai Associates, who advises on bankruptcy cases.
"The fact is we don't know what else is out there."
"In a number of large value frauds, serious gaps in credit underwriting standards were evident," the RBI said in its RTI reply, adding that some of the gaps include lack of continuous monitoring of cash flows and cash profits, diversion of funds, double financing and general credit governance issues in banks.
The RBI has been commended for forcing Indian banks to fully disclose its bad loans, speed up their recovery, and stop hiding fraud cases as non-performing assets.
But, at the same time, thieves and scoundrels have also ganged up and accused the RBI of restricting the flow of credit and hurting the growth of the economy.
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RBI: loan fraud cases involve $9.58 billions or more
By IndianMandarins - 2018-02-17 10:00:43
M K Shukla & Rakesh Ranjan
Unpublished data of the Reserve Bank of India (RBI), which British wire agency Reuters obtained through a right-to-information request, shows State-run banks have reported 8,670 "loan fraud" cases totaling Rs 612.6 billion ($9.58 billion) over the last five financial years through March 31, 2017.
Earlier, Indianmandarins had reported about the possibility of huge fraud in agriculture loans that have starved genuine agriculturists of much-needed funds.
In fact, the numbers of loan fraud cases across India could be even higher since they only include cases involving only loans of Rs 100,000 or more reported to the RBI.
And yet, there has been no movement in the government to go for the whole hog reforms of the PSBs to avoid and prevent frauds like the one committed by Nirav Modi and Vijay Mallya. This has badly exposed the NaMo administration to worst kind of ridicule and taunts from habitual thugs and Pindaris who adorn the top echelons of India's major political parties.
As bad loans surged to a record peak of nearly $149 billion last year, the government should have woken up then and there and initiated at least the measures to reform the archaic lending process. In June 2017, the RBI, in its Financial Stability Report, called frauds in banks and financial institutions "one of the emerging risks to the financial sector."
Along with bad loans, bank loan frauds have also steadily increased reaching Rs 176.34 billion in the last financial year from Rs 63.57 billion in 2012-13, according to the data, which doesn't include the PNB case.
Punjab National Bank, India's second-largest State lender said on Wednesday, February 14, that two junior officers at a single branch had illegally steered $1.77 billion in fraudulent loans to companies, most of them controlled by billionaire jeweler Nirav Modi. It is considered India's biggest fraud ever.
"This might be the tip of the iceberg or the middle, and that is the worry," said Pratibha Jain, a partner at law firm Nishith Desai Associates, who advises on bankruptcy cases.
"The fact is we don't know what else is out there."
"In a number of large value frauds, serious gaps in credit underwriting standards were evident," the RBI said in its RTI reply, adding that some of the gaps include lack of continuous monitoring of cash flows and cash profits, diversion of funds, double financing and general credit governance issues in banks.
The RBI has been commended for forcing Indian banks to fully disclose its bad loans, speed up their recovery, and stop hiding fraud cases as non-performing assets.
But, at the same time, thieves and scoundrels have also ganged up and accused the RBI of restricting the flow of credit and hurting the growth of the economy.
