Banks lose Rs 1.6 crore every hour to cheating, forgery

BENGALURU: Every hour, Indian banks lose Rs 1.6 crore to just “cheating and forgery”, one of the oldest methods of frauds which accounts for a little more than 60 per cent of all money lost by banks.
The Reserve Bank of India (RBI) has eight categories of frauds for the sake of uniform reporting by banks, and just one — cheating and forgery— saw Indian banks lose a whopping Rs 42,276 crore in three years of 2014-15, 2015-16 and 2016-17, with Public Sector Banks (PSBs) bearing the brunt.Data for 2017-18 is being compiled.
Experts say this points to a major vulnerability in the system resulting from lack of training, security frameworks and overall hygiene.
Such fraud basically involves obtaining loans using forged documents, or cheating banks by making false claims. Of the Rs 42,226 crore lost to ‘cheating and forgery’, 89 per cent (Rs 37,583 crore) was lost by public sector banks (PSBs), while private banks lost Rs 4,683 crore. The State Bank of India lost the most — Rs 5,743 crore — accounting for 15 per cent of money lost by PSBs.

The money was lost in 7,505 cases and 4,702 cases were reported by PSBs, while private banks saw 2,803 cases. “This kind of fraud, on this scale, cannot take place without insider involvement. Data show these are clearly not stray cases which means the system needs to be evaluated more carefully now,” Tobby Simon of Synergia Foundation, a multi-disciplinary think-tank based in Bengaluru, said. A retired bank official said RBI has clear policies regarding frauds. He, however, claimed it’s unclear how frauds of such magnitude continue to haunt the system.
The money lost to ‘cheating and forgery’ in the three years accounts for 60 per cent of all frauds, which is slightly higher than Rs 70,000 crore. All these are only cases where the fraud involved is more than Rs 1 lakh, and experts say frauds involving money less than Rs 1 lakh could have cost the banks at least another few hundred crores.