Bank frauds take 74pc leap to Rs 71,543 crore in FY19: says Reserve Bank's annual report

Mumbai: Frauds in the banking system in India shot up by 74 per cent to Rs 71,543 crore in financial year 2018-19 compared with frauds committed worth Rs. 41,167 crore in the financial year 2017-18, the Reserve Bank of India said in its annual report on Thursday, reported NDTV.

The Reserve Bank of India stated in its report that there is a lag between the date of occurrence of the frauds and its detection which comes up to 22 months.

“Among bank groups, state-run lenders, which constitute (the) largest market share in bank lending, have accounted for the bulk of frauds reported in 2018-19. It was followed by private sector banks and foreign banks,” according to the RBI's report.

Frauds related to loans constituted a major share of the total amount involved in these frauds in the financial year 2018-19, while the share of frauds in off-balance sheet items declined from a year ago.

Frauds relating to card or internet banking and deposits constituted only 0.3 per cent of the total value of frauds in 2018-19, the central bank's report added, NDTV reported.

72 cheating and forgery cases were the major components, followed by misappropriation and criminal breach of trust. Fraud cases involving an amount of less than Rs. 1 lakh were only 0.1 per cent of the total amount involved in 2018-19, the Reserve Bank of India's annual report concluded.

The Reserve Bank of India's contingency fund, useful in fighting any exigency, has plunged to Rs 1.96 lakh crore as of June 30, after the Rs 52,000 crore excess payout to the government, the central bank's annual report for FY19 said, reported News18.

The RBI board has decided to transfer the excess reserves to government based on the Bimal Jalan committee report on the appropriate economic capital framework. In the annual report, the central bank makes it clear that as of June 30, 2019 it "stands as a central bank with one of the highest levels of financial resilience globally."

The report states that after the payout to the government, "the balance in the contingency fund as of June 30, 2019 was Rs 1,96,344 crore compared to Rs 2,32,108 crore as of June 30, 2018."

As per the committee, the surplus distribution policy targets having the capital reserves buffer in the range of 5.5-6.5 per cent of the entire balance sheet, reported News18.

Apart from the Rs 52,000 crore, the RBI had also paid a surplus from its profit worth Rs 1,23,000 crore to the government, which is virtually double the size of the average of recent payouts.

The annual report published on Thursday says the RBI computed exchange gains/losses using weighted average cost method resulting in an impact of Rs 21,464 crore. It also said income from domestic sources increased 132.07 percent to Rs 1,18,078 crore from Rs 50,880 crore in the previous fiscal.

A table on expenditure explained that the overall provisions plummeted more than 99.5 percent to Rs 64 crore from a high Rs 14,190 crore in the year-ago period as the buffer has demarcated at much lower but comfortable level.

On the other hand, the RBI balance sheet expanded by 13.42 percent to Rs 41.03 lakh crore while its income soared by 146.59 percent to Rs 1.93 lakh crore in 2018-19, the central bank said in its Annual Report.

The apex bank's interest income grew 44.62 percent to Rs 1.06 lakh crore and other income rose to Rs 86,199 crore as on June 30, 2019, from Rs 4,410 crore a year ago.

As on June 30, 2019, the RBI held 618.16 metric tonnes of gold as compared to 566.23 metric tonnes as on June 30, 2018. The increase is on account of addition of 51.93 metric tonnes of gold during the year.

The RBI's expenditure fell by 39.72 percent to Rs 17,045 crore in 2018-19. This includes a provision of Rs 64 crore was made towards Asset Development Fund.

The RBI's Annual Report details the apex lender's working and operations between July-June every year. One of the recommendations of Bimal Jalan committee report is that the central bank should align its accounting year to the Arpil-March fiscal year for better understanding.