ver 23,000 cases of fraud involving Rs 1 lakh crore have been reported in the past five years in various banks, according to the Reserve Bank of India (RBI). First fraud was detected in Punjab National Bank and one after another numbers of scams are coming in open. The recent one detected is from the Bank of Maharashtra. Till the other day, these new generation banks were advertised as greater than RBI and SBI in “modern innovative practices.” Now that bubble is pricked.
While we acknowledge that it is pure coincidence, it is interesting how the names like Modi and Ambani seem to pop up here. The investigating team has accused supervisory bank officials of attempting to pin the entire blame of the fraudulent transactions on then Deputy Manager, who has earlier arrested in the case. The accused officials were responsible for keeping a close watch on daily transactions through the SWIFT messaging system. Misrule in power in the Banking sector is the root cause for all this. People are retained in one department like International Banking division for a very long time and that makes them corrupt as they come across all the ways and means to hide fictitious transactions. The PNB scam should be an eye-opener and the other bankers should apply caution in future to avoid bigger scams.
Bank of Maharashtra has come in the fraud list. In the aftermath of the fraud, top brass was arrested for giving fraudulent loans to DS Kulkarni Group. The Economic Offence Wing swung into action and arrested even their chairman and managing director for the fraud touching Rs 3,000 crore. The Banking sector is facing fraud cases throughout the country and the RBI as a watchdog has failed to detect the frauds through their inspection and audit teams. This is one more big fraud after the PNB fraud. Now it is time to tighten the screws and the Finance Ministry should move in a direction to have overall control. Banking frauds cripple the country very much.
Where does this begin and where end — so many people of the highest rung being dishonest at the same time. There have been some external pressure, it is time to inquire and ensure. We suspect that this would be political pressure only. This cannot otherwise happen. Considering the way this has been happening only in public sector banks, the suspicion increases. So many people cannot be dishonest at the same time. In the ultimate analysis, numbers of banks are involved in the frauds amounting to a huge sum.
Probably it is the time to make changes in the IPC making it difficult to get bail in cases involving public assets. Arresting all the accused sounds great. However, will there be any further progress and all the money lost by the bank will be recovered? Mallya, Nirav, Kulkarni and others, the list is just increasing in numbers.
Thus, the Banking scams continue to haunt our financial system and tax payers’ money is going to drains. RBI is dependent on member of Banks and there are zero checks in Public Sector Banks. Even after the big PNB scam, the Bankers have learned lessons and the Bank of Maharashtra scam amount to Rs 3,000 crore and RBI has no answer.
Poor and downtrodden people applying for loans are put to test with many questions and demand for documental proofs; whereas, big fishes are getting huge loan amount without much of all these formalities. There is no reality check and the middlemen, agents, chartered accountants and consultants have a bigger say on the banks and its top bosses leading to so many loans going bad.
Defective balance sheets, window dressing all add to the woes and shell companies are being promoted to flush out funds received as loan amount. Big bosses escape arrest as the leave country with an ulterior motive of cheating banks in crores. Banking officials are conniving to make the transactions go through. The middle men offer huge sum as kickback for sanctioning such a hefty amount.
While the amount involved in loan frauds in public sector banks has increased exponentially and has grown even faster since 2014, the rate of increase in private sector banks has been relatively slower. The overall number of frauds has also increased by 20 per cent since 2009. The RBI data was obtained in response to an RTI query by economist Prasenjit Bose. It is wake up call for the Finance Ministry, watchdog RBI and CMDs of PSUs and also to the lower level officers, who put up such fraudulent proposals for sanction under pressure and pay heavy price for being complacent. Since the nationalisation of 21 banks, the banking has become worst and now touching a rock bottom.
(The views expressed by the author in the article are his/her own.)