(EXCLUSIVE) Rs 6 trillion siphoned off through bank frauds in last 5 years: RTI reply


We always knew that the bank frauds had been on the rise in India, but not quite at a level as we know now.

In an astonishing revelation, it has emerged that Indian banks saw a phenomenal rise in bank frauds in the last five years.

An RTI reply (exclusively accessed by www.jantakareporter.com) has said that more than 26,000 cases of bank frauds (amount involved Rs 1 lakh and above) were reported between January 2010 and December 2015 with the total amount being involved is close to Rs 6 trillion.

The RTI reply said, “As per the information received from banks, 26330 fraud cases (wherein amount involved is 1.00 lakh or above) have been reported from January 01, 2010 to December 31, 2015 and total amount involved is Rs 57,69,661.88 lakh.”

An Ahmedabad-based RTI activist had filed a request asking to know the state-wise data on bank frauds in the last five years.

The reply, however. did not include the state-wise data because ‘the required format is not available in a compiled form and is spread over a large number of files.’

“This reply will serve as an eye-opener for the government to take urgent steps to check corruption through banks. Rs 6 trillion is not even the GDP of many countries around the world. So, for dodgy customers to have successfully siphoned off this much of money is alarming. And by the way, the amount stated in the RTI reply doesn’t include he fraud where amount involved was less than Rs 1 lakh. If included, you can imagine the real amount involved in bank fraud,” said the RTI activist, who filed the request.

Bank fraud on the rise in India

Bank frauds have been on rise in the recent years. In 2013, news portal Cobrapost unearthed the racket of money laundering prevalent across several big banks in India.

The website, through a series of undercover operations, had revealed how basic banking rules such as Know Your Customer norms, Anti Money Laundering Rules and the Foreign Exchange Management Act, 1999 were being blatantly violated.

This prompted the Reserve Bank of India to undertake a thematic study and impose Rs 50 crore fines on 22 banks.

Less than two years later, an alleged Rs 6,000 crore money laundering fraud surfaced at Bank of Baroda indicating that nothing had changed.

In April 2015, the forensic wing of the chartered accountancy firm Deloitte, carried out a survey before concluding that a whopping 93% of those surveyed had felt that the bank fraud was on the rise in India. As reported by livemint.com, the largest number of frauds was found in retail banking followed by corporate banking. The lack of attention by line managers and senior management on deviations from existing practices was cited as a top reason for such frauds.

Is it only India’s problem

Bank frauds have been phenomena plaguing countries throughout the world. But while bank malpractices increases in other parts of the world, so did the prosecutions and fines unlike India.

A Reuters article in May last year said that 20 of the world’s biggest banks had paid more than $235 billion in fines for various violations over the past seven years.

More recently, five global banks were slapped a fine of over $5.7 billion for rigging foreign exchange markets.

While the malpractices prevalent in international banks are far more serious in nature than what’s been reported in Indian banks, it still needs to be taken seriously.  Because, money laundering remains a serious crime in India and defeats the efforts to check the flow of black money.

Experts say that the government of the day must severely punish banks regardless of whether they knowingly or unknowingly became party to the rampant frauds.