New rules for availing loans amid rise in bank fraud cases in H1 FY20

According to the government data, there were bank frauds worth Rs 139,807 crore in the financial year 2018-19.

NEW DELHI:  The government is likely to come up with new guidelines for sanctioning loans and has asked bankers to be more vigilant in providing loans to small businesses, including Mudra loans, in the wake of bank frauds doubling in first six months of the current financial year.

According to the government data, there were bank frauds worth Rs 139,807 crore in the financial year 2018-19, which has gone up to Rs 2.64 lakh crore in just the first half of the current financial year.

“While the government is asking banks to extend loans to small business, it has noted that fraud cases where loan amount is less than Rs 50 crore has gone up. More check and balance is needed while sanctioning loans, and there will be a guideline soon,” an official, Department of Financial Services (DFS), told this publication. Also, the Reserve Bank of India Financial Stability Report has revealed that there were a total 4,412 fraud cases reported, involving Rs 113,374 crore, which were loans below Rs 50 crore in H1 FY20. The fraud amount has exceeded the figure of last financial year, when banks had reported a total 6,801 cases involving Rs 71,543 crore.

“A lot of such amount is given to MSME (micro, small and medium enterprises) sector and as Mudra loan. We have asked banks to be more vigilant and to provide loans only after proper background check,” he further said. Moreover, there are other cases as well. For instance, frauds involving loan amount above `50 crore and below Rs 1,000 crore has gone up from 332 cases, involving Rs 61,759 crore to 398 cases involving Rs 105,619 crore.

There were 21 bank frauds cases reported in loan amount above Rs 1,000 crore, involving Rs 44, 951 crore in total, which is much higher than the total number of frauds cases reported since the year 2014. The amount of money will increase further if next six months of the current financial year is taken into account, said the official. Due to various reforms in the sector, bank frauds are detected easily, the official added. “Post PNB case, banks are more prompt in reporting frauds. The government has taken steps to improve the financial system,” he said.

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