Rs 19,194-crore this year: Bank fraud loss already more than 2017 mark

On Thursday, the Central Bureau of Investigation (CBI) registered a bank fraud case against Hyderabad-based Totem Infrastructure Ltd and its promoters, taking to 12 the number of major cases of suspected bank swindles it has registered this year.

Totem is accused of defrauding a consortium of eight banks led by Union Bank of India to the tune of Rs 1,394 crore. That takes the total amount involved in bank fraud cases this year to Rs 19,194 crore. The company couldn’t immediately be reached for comment on Thursday evening.

The amount has already exceeded the Rs 11,777 crore involved in the 31 bank fraud cases registered by the investigating agency’s Banking Security and Fraud Cell (BS&FC) in all of 2017 — an indication of both the rash of bank fraud cases emerging as banks follow up on overdue loans and the huge amount involved in the Punjab National Bank (BNP) fraud case.

Diamond traders Nirav Modi and Mehul Choksi are alleged to have defrauded PNB to the tune of Rs 12,922 crore (thus far).

According to the Reserve Bank of India’s master directions issued on 1 July , 2016, banks can directly make a complaint to the CBI’s specialized banking fraud unit, if the fraud involves more than Rs 25 crore and up to Rs 50 crore. 

 Complaints of frauds involving more that Rs 50 crore are lodged by the joint director (policy) of CBI but these cases too usually end up with the banking fraud unit. Cases involving frauds of between Rs 3 crore and up to Rs 25 crore are probed by the Anti Corruption Branch and Economic Offences Unit of the agency. 

“The BS&FC was formed in 1992 during the Harshad Mehta (stock market) scam, when the government felt the need to have a specialized unit in CBI to probe banking frauds,” said NR Wasan, who retired as chief of the Bureau of Police Research and Development and worked with CBI for more than a decade. 

 In 2017, the BS&FC unit in Bengaluru registered the maximum of 11 cases while those in Delhi and Mumbai accounted for eight cases each. The Kolkata BS&FC unit registered four cases last year. 

The fraud figures are based on the initial reporting by the banks to the CBI. 

CBI probes only those cases where the fraud amount is above Rs 3 crore. The state police deals with the rest, although banks have to lodge a complaint with the state police as well as the Serious Fraud Investigation Office of the ministry of corporate affairs on frauds involving amounts higher than Rs 1 crore (but less than Rs 3 crore). 

 To be sure, the total amount of money involved in bad debts given out by banks is much bigger than the value in these cases. According to a database maintained by credit information company CIBIL, the total amount outstanding with wilful defaulters on 30 September 2017 was Rs 1.11 lakh crore. This amount only includes cases where the value of loan outstanding is more than Rs 25 lakh.