PSBS step up action in hunt for frauds

BANKS HAVE FILED MORE THAN 90 CASES AGAINST ERRANT FIRMS AND INDIVIDUALS WITH PROBE AGENCIES

NEWDELHI: Nudged by the government to detect fraud in non-performing loan accounts (NPAS), state-run banks have filed more than 90 cases against errant companies and individuals with investigation agencies.

This comes at a time the banking system is grappling with high levels of bad debt and many instances of customers defrauding banks. As part of the clean-up exercise to revive the health of state-run lenders, the department of financial services had asked banks to review all NPA accounts of more than ₹50 crore for fraud as it looked to push banks to act promptly and stringently against fraudsters.

Banks were also directed to get copies of passports of all individuals linked to companies where loans above ₹50 crore have been given. The diktat, considered onerous by most lenders, came after state-run banks reported rising instances of frauds where company promoters were in wilful default.

Some of the major frauds that have come to light in the last few months including the ₹14,356 crore scam that hit Punjab National Bank involving jewellers Nirav Modi and Mehul Choksi, and the ₹3,695 crore cheating case against Rotomac pens promoters where Bank of Baroda was the lead lender.

A senior government official said the government is aiming to make bankers take responsibility for their lending decisions.

“There has to be some accountability. Bankers have to know details of all their big accounts and act when there are instances of deliberate fraud,” said a senior government official who did not want to be identified, adding banks have become more proactive in registering cases with investigative agencies. “Bankers now know that they cannot any longer hide NPA accounts by providing fresh loans to defaulters,” the official added.

For instance, in the case of nine power plants where loans have been given by state-run banks, not even boundary walls have come up, the official pointed out.