State-owned banks reported frauds of over £9.57 billion from April to September this year, finance minister Nirmala Sitharaman told the upper house of parliament, as the government struggles to help banks recoup losses. "Government has taken comprehensive measures to curb the incidence of fraud in banks such as freezing of 338,000 bank accounts of inoperative companies in the last two financial years and the enactment of a law with a provision to confiscate the property of those found to have committed fraud and who have fled the country,” the minister said. The government has directed public sector banks to examine all accounts exceeding £5 million, if classified as NPAs, from the angle of possible fraud. Banks are also required to place a report on the findings of investigation before the bank’s Committee for Review of NPAs.
The RBI has also set up a Central Fraud Registry (CFR), based on Fraud Monitoring Returns filed by banks and select financial institutions, which provides a searchable online central database for use by banks. Rising frauds add to bank NPAs, but write-offs and recoveries have led to a fall in the overall NPA levels in the banking sector. Gross NPAs of all banks fell by £9.79 billion from £103.6 billion as on March 31, 2018 to £93.8 billion as on June 30, 2019. The government also stepped up capital infusion in the public sector banks to enable them withstand the mountain of bad loans. Over the last five financial years, including the current financial year till date, government has injected £ 31.3 billion worth of equity in the state-owned banks while they raised another £7.6 billion through the market.
Minister of State for Finance Anurag Thakur said with the increase in limit of withdrawal to Rs 50,000 for customers of Punjab and Maharashtra Cooperative (PMC) Bank, 78 per cent of depositors of the bank will be able to withdraw their entire account balance. As on September 23, 2019 (date of imposition of RBI directions), total depositors of PMC Bank were 9,15,775. The statutory inspection of the bank with reference to its position as on March 2019 conducted by RBI revealed large group exposure toward Housing Development and Infrastructure Limited (HDIL) Group companies to the tune of about £622.6 million. Out of the total exposure of £622.6 million as on March 31, 2019 to the HDIL group, only £43.95 million was disclosed to RBI and remaining £578.64 million remained undisclosed, he said.