According to a report by proxy advisory firm Institutional Investor Advisory Services (IiAS), there was at least one case of fraud committed every hour on an average in Indian banks during the financial year 2017.
Between April 2016 and March 2017, the "Indian banking sector reported 12,533 (cases of) fraud, aggregating to Rs. 18,170 crore," the report stated.
The Bank of Maharashtra reported the highest cases of fraud at 3,893, followed by the ICICI Bank at 3,359 and HDFC Bank at 2,319.
In terms of highest quantum of frauds in FY17, the Punjab National Bank fared the worst at Rs. 2,810 crore, followed by the Bank of India at Rs. 2,770 crore, and the State Bank of India at Rs. 2,420 crore.
Further, in banks like the Bank of Maharashtra, Bank of India, South Indian Bank, PNB, and Dena Bank, the aggregate quantum of losses was low but the average fraud size was high.
According to former deputy governor of the Reserve Bank of India (RBI) KC Chakrabarty, bank frauds occur due to poor control and oversight of the management as well as the regulator.
Notably, even though public sector banks (PSBs) spent significantly more on audits than their private sector counterparts, they suffered the most amounts of losses due to frauds.
"Though, the banks are paying high audit fees, it is not necessarily resulting in lower frauds, which means that the overall audit quality needs to be improved," the report observed.
Indian banks are also reportedly suffering from an overall pile of Rs. 9.5 lakh crore in bad loans. The IiAS report has provided numbers from much before the Rs. 12,650 crore Nirav Modi-PNB loan scam and ICICI bank irregularities, both of which occurred in 2018.
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