Good banker can smell bad loans: CVC to banks

A good banker can smell bad loans, Vigilance Commissioner T M Bhasin said on Friday. His statement comes in the backdrop of soaring non- performing assets (NPAs) of various banks. Addressing an event here, he said over 95 per cent of the fraudulent activities were reported from the financial sector, including banks, insurance companies and cooperative societies. About 80 per cent of such fraudulent activities were reported from the public sector banks, while 15 per cent were reported from the private sector banks, Bhasin added.

Referring to an analysis of such acts of fraud, he said while the number of such cases was less as far as the public sector banks were concerned, the amount involved in these cases was higher than the private sector banks.

"We took the top 10 frauds and found out that there were early warning signals, which were overlooked by the bankers. That is why, I would say a good banker can smell a bad loan," Bhasin said, addressing a national seminar on 'Fraud Risk Management - The New Initiatives'.

He added that a good banker could understand what was right and what was wrong. "Sometimes, it is due to lack of knowledge, sometimes it is because of appraisal skills, sometimes because of external pressure, sometimes due to connivance or complexity or putting too much trust in someone. These are the main factors which lead to frauds," Bhasin said.