Data from RBI Deputy Governor, K C Chakrabarty’s speech to analyse the numbers behinds Financial Frauds that were committed.

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On a year-on-year basis, we can see that the number of frauds are definitely reducing; 24,791 in 2009-10, to 13,293 for 2012-2013. Seems healthy.

But hang on! Look at the actual rupee value of these frauds over the last couple of years; it has been steadily but surely rising. Up from Rs. 2,037.81 cr. to Rs. 8,646 cr over the same period. That’s a CAGR of 43.52%! So it could be that our supervisory system is becoming really potent at picking out the smaller frauds, but are missing out on the really large ones. Look at it this way:

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Truly staggering to think about it; the defrauders are now 8 times more potent than they were 4 years ago!

Now we might be inclined to dis-regard these numbers thinking, hey that’s just a small number when you’re talking about banks; what is Rs. 65 lakhs or even a crore to them! Remember, these frauds affect any person who avails a bank’s services, that is the common man (Aam Aadmi to echo last year’s flavour of the season). Such numbers make huge difference to a single individual, and as such cannot be taken lightly.

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Let’s dissect these numbers further, to see how individual participants in the banking industry have done (or ‘not done’ depending on how you view frauds):

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Of the total 1,69,190 cases involving the banking sector:

  1. Nationalised Banks (there are 26 of them incl. SBI and its associates) accounted for 17.53% (29,653 incidents). However, the value of these incidents amounted to 83.01% of the total, i.e. Rs. 24,828 cr. The massive scale of nationalised banks pretty much ensures that frauds typically are of very large sizes; these guys had an average fraud per case of Rs. 83.73 lakhs! Truly behemoths in this criterion as well.
  2. Old Private Sector banks (there are 13 of them) reported 2,271 such cases (1.34%). Again, the average fraud per case was very high at Rs. 75.20 lakhs, resulting in them accounting for a share of 5.71% of the total fraud amount.
  3. New Private Sector Banks (there are 6 of them) had 91,060 incidents; that’s 53.82%! However, the average fraud per case was much smaller (Rs. 2.35 lakhs) and hence these guys contributed just 7.16% to the total fraud amount.
  4. Foreign Banks (there are 43 of them) had 46,206 cases (27.31%). Again, the average fraud per case was lower at Rs. 2.67 lakhs, bringing their contribution to just 4.12% of the total amount.

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