Public sector banks (PSBs) have lost money to the tune of Rs8,734 crore in the last three years on account of loans (personal, housing, corporate and others) disbursed based on fake documents submitted by borrowers. As many as 6,362 bank employees have been questioned for their involvement in the fraud.
Such frauds not only upset the profitability of banks, but also affect genuine borrowers as bank officials now take more precautions than before, thereby delaying the loan sanctioning process, said Rajesh Goyal, a former employee with a PSB in Delhi.
Banks report these cases under the “cheating and forgery” category. According to information obtained from the office of the ministry of finance under the Right to Information Act, 4,523 cases of fraud have been recorded by PSBs between 2010 and 2012. Many of these cases are being investigated by the CBI or the state police.
An official with a nationalised bank said in many cases, borrowers misuse the bank’s trust by submitting fake documents.
The official said officers are not equipped to cross-check the documents. “In fact, there are agents in the market who specialise in duplicating documents. With the emergence of new technologies, they (agents) have become experts in faking documents and their number is increasing,” he said.
The fraud amount has increased almost four times since 2010 (1,202 crore) to Rs5,359 crore in 2012. Experts said the whopping increase in the fraud amount is also a reason for growing non-performing assets in the banking sector.
Incidentally, such frauds have been taking place despite a circular issued by the RBI in March 2009, directing banks to report names of professionals who facilitated the perpetration of fraud to the Indian Banks’ Association (IBA). The IBA, in turn, prepares a document called “caution lists” of such professionals which is circulated among banks.
In March 2011, the government set up a central registry for maintaining records of registrations relating to property mortgaged with different lenders to minimise the fraud.
The fraud amount has increased almost four times since 2010 (1,202 crore) to Rs5,359 crore in 2012. Experts said the increase in the fraud amount is also a reason for growing NPAs in the banking sector. Such frauds have been taking place despite a circular issued by the RBI.