Corporate frauds trebled in first seven months of FY20: SBI

The big scams to the tune of Rs 26,757 crore between April and November this year were reported by the SBI to the regulators in comparison to Rs 10,725 crore in FY19, according to data revealed in the initial public offering (IPO) document of SBI cards

Corporate frauds at the State Bank of India (SBI) trebled in the first seven months of FY20 (2019-2020) as against the whole of FY19 (2018-19).

The big scams to the tune of Rs 26,757 crore between April and November this year were reported by the country’s biggest mass-lender to the regulators in comparison to Rs 10,725 crore in FY19, according to data revealed in the initial public offering (IPO) document of SBI cards cited by the Economic Times.

The FY18 (2017-18) fraud disclosures by the SBI were at just Rs 146 crore which makes the comparison look starker. The scam cases have increased to 48 so far in FY20 from 25 in FY 19, and 8 in FY18. The value of frauds in the SBI data is at a minimum of Rs 100 crore, the report added.

This development comes close on the heels of the Reserve Bank of India’s (RBI) constant push to the lenders to report instances of frauds more quickly and proactively. The central bank has also directed the lenders to review unsettled NPAs worth more than Rs 50 crore from the fraud aspect.

Presently, it takes around 55 months for big-ticket corporate scams to be identified and reported by an Indian bank, as per the RBI’s data.

“Most of the accounts being declared fraud now have been NPAs for a long time; however, the official processes take time. In a few cases, forensic audit has also been initiated,” a forensic expert working at a Big4 consulting company told the news daily. “Banks will continue to see a rise in the frauds reported until all the legacy cases are resolved. It will take at least a year from now,” the expert added.

Meanwhile, following SBI, Punjab National Bank witnessed the highest frauds to the tune of Rs 10,821 crore. Finance Minister Nirmala Sitharaman had said on November 19 that the Indian banking system declared frauds worth Rs 95,760 between April and November 2019.

“Comprehensive measures have been taken to prevent frauds, including directions to banks to examine all NPA accounts above Rs 50 crore from the angle of possible fraud, initiation of criminal proceedings, enactment of Fugitive Economic Offenders Act 2018,” the finance minister said in a reply to a question posted by a Rajya Sabha member in the ongoing winter session.