Public sector banks lost Rs 2,450 crore to frauds involving staff: RBI data

BENGALURU: Among other things that emerged in the aftermath of the massive Punjab National Bank (PNB) scam is the active role of employees of the Public Sector Banks (PSBs) in multiple frauds over the years. TOI has accessed Reserve Bank of India data that reveals the number of cases involving staff across various states and the amount of loss reported.

Overall, data from April 2013 to June 2016 shows that a total of Rs 2,450 crore was lost to 1,232 frauds of Rs 1 lakh and more where employees were involved. RBI is yet to classify state-wise data for subsequent quarters.

Of these, southern states, including Maharashtra, has 49% (609) of all cases, but account for just 19% (Rs 462 crore) of the total money lost to such crimes. In comparison, Rajasthan, which has just 3% (38) of cases with employee involvement, accounts for 44% (Rs 1,096 crore) of money involved.

Tamil Nadu, Andhra Pradesh, Karnataka and Maharashtra have the most cases of staff involvement in frauds (in the same order) in the country while Rajasthan, Chandigarh, Delhi and West Bengal lost the most money, collectively accounting for 70% of all the money lost (in the same order).

The RBI mandates that “Cases of fraud involving Rs 1 lakh and above, committed by outsiders on their own and/or with the connivance of bank staff/officers must also be reported." But these cases do not account for smaller cases of employee fraud, which experts say also run into crores of rupees.

One bank manager who did not wished to be named, said: “One of the reasons you see more number of such cases in the South could be because there are more bank branches in these states which have more number of urban centres. However, that is no excuse to have high crime rate, especially involving staff.”

Analysing the data, one expert said that it is most likely that frauds in Rajasthan and other states that lost the most money, could all be related to advances, while those from the Southern states could be related to deposits.

“When money is being lent as loan, the exposure is generally higher, as opposed to deposit-related frauds which generally do not involve large amounts of money,” he explained. Multiple experts argue that lack of good practices, including allowing employees to work at the same section and branch for long periods, have been hurting PSBs.

The RBI says “that banks should follow the guidelines for reporting frauds such as unauthorised credit facilities extended by the lender for illegal gratification, negligence and cash shortages, cheating, forgery, et al to the state police authorities.”

It adds that while dealing with such cases, the banks should not merely be motivated by the necessity of recovering expeditiously the amount involved, but should also be motivated by public interest and the need for ensuring that the guilty persons do not go unpunished.

Frauds Over Rs 1 lakh Involving Staff & Money Lost:

State	No. Of Cases	% To Total Cases	Amount Involved	% To Total Loss
Tamil Nadu	170	14%	Rs 83.09 cr	3%
Andhra#	157	13%	Rs 148.41 cr	6%
Karnataka	125	10%	Rs 89.34 cr	4%
Maharashtra	107	9%	Rs 110.43 cr	4.5%
Kerala	50	4%	Rs 30.53 cr	1.2%
Rajasthan	38	3%	Rs 1,096 cr	45%
Chandigarh	03	0.02%	Rs 253.44 cr	10%
Delhi	37	3%	Rs 188.22 cr	8%
West Bengal	69	6%	Rs 167 cr	7%
Overseas Branches	9	0.7%	Rs 41.6 cr	1.7%
21 Other States	467	38%	Rs 241.53 cr	10%
Total	1,232	100%	Rs 2450 cr	100%

Source: RBI | % & Figures Rounded Off Whereever Possible | #Includes Telangana