a) whether the Government is investigating the cases of bank scams that have occurred recently, if so, the details thereof, scam-wise and the outcome of the investigation as on date;
b) the steps taken/proposed to be taken by the Government to check such scams for protecting the interests of depositors; and
c) the action taken against the officers found involved in these scams?
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(a) to (c): Data provided by Reserve Bank of India (RBI) in respect of number of fraud cases (amount involved in individual cases Rs.1 lakh and above ) and on action taken on bank officials involved, is as under:
(i)Bank wise data of frauds during the last two financial years 2015-16 & 2016-17 is at Annex-1.
(ii)Bank wise data on number of staff side action initiated/taken during last two calendar years 2016 and 2017 is at Annex-2.
(iii)State wise data on number of staff side action initiated/taken during last two calendar years 2016 and 2017 is at Annex-3.
The measures taken to control and prevent frauds in the banks, inter-alia, are as follows:
(i) In May, 2015, the Government of India issued instructions to all the CMDs/MD & CEOs of Public Sector Banks (PSBs) on “Framework for timely detection, reporting, investigation etc. relating to large value bank frauds”, which, inter-alia provides that all accounts exceeding Rs. 50 crore, if classified as Non-Performing Assets, should be examined by banks from the angle of possible fraud. A report would be placed before the Bank’s Committee for review of NPAs on the findings of this investigation. The above instructions have been reiterated in February, 2018.
(ii) RBI has issued Master Direction on “Frauds – Classification and reporting” dated July 01, 2016. To compress the time taken in detection of fraud, a framework for handling loan frauds has been put in place. Objective of this framework is to direct the focus of banks on the aspects relating to prevention, early detection, prompt reporting to the RBI and the investigative agencies (for instituting criminal proceedings against the fraudulent borrowers) and timely initiation of the staff accountability proceedings.
(iii) For deterring economic offenders from evading the process of Indian law by remaining outside Indian jurisdiction, Government has introduced the Fugitive Economic Offenders Bill, 2018 to provide for attachment and confiscation fugitive economic offender’s property and has advised PSBs to obtain certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs. 50 crore.
(iv) For enforcement of auditing standards and ensuring the quality of audits, Government has initiated establishment of National Financial Reporting Authority as an independent regulator.
(v) To send a clear message that borrowers cannot wilfully default and continue to enjoy ownership of their assets, wilful defaulters and connected persons have been debarred from participating in the resolution process under the Insolvency and Bankruptcy Code (IBC).
(vi) Launch of Central Fraud Registry (CFR), a web based searchable database of frauds reported by the banks, containing data for the last 13 years has been made operational by RBI in January, 2016.
(vii) Banks have been advised through circulars for rotation and mandatory leave of staff in sensitive positions and the same was advised to be covered in internal audit also in 2011.
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