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What Are Bank Frauds In India?

by Arpita Wadhawan

What is Bank fraud?

When a person deliberately performs the act of omission or commission in the course of Banking transactions or in the books of accounts of the bank for the personal gain of any person. Any manipulation of rules of banks or the books of accounts of the bank is categorized as Bank frauds.

Bank frauds in India

In recent years, the cases of Bank frauds are constantly being reported in India. Since liberalization in 1991-92 the cases of bank frauds are constantly rising which is ultimately affecting banks and the national economy adversely. Reserve Bank of India has taken various measures to keep a check on the frauds which has resulted in a decrease in a number of frauds but the amount of fraud has still increase over the years. In the last 3 years only, there has been a loss of over 22000 to the public sector banks due to various frauds.

Non-performing assets (NPA)

Non-performing assets are those loans given by the bank which can’t be recovered due to various reasons like insolvency of the person given the loan. In the Indian banking sector, Non-performing assets are constantly increasing due to various reasons which mainly include negligence of bank employees and frauds done in the banking sector. During March 2018 the amount of NPA cross 9 lakh crores in India. This has become a great problem in the banking sector as well as for the whole economy.

Some latest Bank frauds in India

There has been a number of frauds in the banking sector in recent time, few of them are as follows:

  • Fraud in PNB:- Recently, in 2018, fraud was exposed in a public sector bank (Punjab National Bank), in which employees had issued fake Letter of Understanding for buyer’s credit to companies of Geetanjali group and Nirav Modi. The fraud was of around ₹11,346 crores which are among the biggest Banking fraud in the history of the Indian Banking sector.
  • Andhra Bank’s fraud:- In fraud of ₹5000 crores the directors of Andhra Bank and directors of a Gujrat based pharma company had fraudulently withdrawn the said amount on account of several benami companies which were later converted into NPA.
  • Maharashtra bank’s fraud:- In 2017, the former head of Pune zone of Maharashtra Bank was arrested as he had fraudulently credited loans on forged documents while also violating laws for sanctioning amount.

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