Banks no safe havens for your money; depositors lost Rs 27,000 crore in last five years-DNA
10th April 2015
Your money may not be safe in the bank, and not because of macro reasons beyond control. Cheating and forgery have led to public and private sector banks losing as much as Rs.27,000 crore cumulatively in the last five years, reveals information obtained by dna under the Right to Information (RTI) Act.
And even this is just a conservative estimate with the actual losses being several thousand crores more. More than 11,500 cases of cheating and forgery of amounts involving Rs.1 lakh and above were reported by banks to RBI. "The smaller amounts are not reported by banks to RBI (Reserve Bank of India). If they are also considered, then the fraud amount will increase by several thousand crores," said an RBI source on condition of anonymity.
The large-scale banking fraud has claimed many victims. Like 32-year-old Hyderabad-based former journalist Nagaraju Kopula, who has been suffering from lung cancer since 2012 and lost Rs.1.23 lakh from his State Bank of India (SBI) account on March 6, 2015. The money had been collected by his friends and family for his treatment and other expenses. "One day somebody called from SBI to ask for my account details and after that all the money was gone," says a broken Kopula, now barely able to speak.
His was amongst the 1,124 cases reported by SBI, the worst hit with losses of Rs.3,494 crore.
Of the Rs.27,000 crore losses, public sector banks accounted for Rs.24,000 crore and the rest Rs.3,000 crore was reported by private sector banks. While SBI headed the list, ICICI Bank leads the list of private sector banks with losses of Rs.1,089 crore in 1,776 cases - the highest amongst all banks.
Bank view
"The number of complaints is more but amount wise, it is clear that the total amount involved is quite less. It is due to the fact that we have put in some robust systems in place, taking help of technology to put effective checks on the number of frauds," said an SBI spokesperson.
ICICI Bank did not respond to the detailed questionnaire sent by dna.
Cheating and forgery cause losses to the customers in some cases. However, banks lose money in all cases. On July 2, 2012, RBI issued detailed instructions to banks containing details related to how they should examine fraud cases and report them. "Most banks try to put in place robust systems and controls to prevent fraud and forgery – regrettably crooks and criminals use more and more sophisticated methods, especially where online fraud is concerned, to defraud banks," said Meera Sanyal, former chief executive officer CEO and chairperson of the Royal Bank of Scotland in India.
Till the investigations are on, customers who have lost money generally suffer. They are made to run from pillar to post for no fault of theirs.
Why and how
An analysis of big cases looked into by the Central Bureau of Investigation (CBI) reveals that bankers sometimes exceed their discretionary powers and give loans to unscrupulous borrowers on fake or forged documents. After getting the money, the borrower escapes, causing huge loses to the banks.
More than 7,000 employees of different public sector banks are under the scanner for involvement in these cases. The CBI, for instance, has arrested a person in a case relating to the alleged loss of Rs.7 crore to the Indian Overseas Bank (IOB) in the matter of sanctioning and disbursing of cash credit loan on the basis of fake and forged documents.
B Venkat Ramana, general manager, corporate communication, UCO Bank, said the figure given under RTI is yet to be verified by them. The most prevalent nature of cheating and forgery cases relates to forged/fake documents/diversion of funds by borrowers. "When fraud is proved with employees' involvement, (there is a) disciplinary action/criminal case against the employee," Ramana said.
According to the General Manager (Risk Management), Bank of Baroda, the bank immediately carries out an internal investigation if a case of fraud is detected. The incidence is reported to the RBI and a complaint lodged with the local police/state CID/EOW (Economic Offences Wing)/CBI depending upon the amount involved. "In case involvement of the employee is proved, bank takes disciplinary action, which includes even termination/dismissal of the employee," he said.
The Central Bank of India, Indian Overseas Bank, Canara Bank, Axis Bank Ltd, Lakshmi Vilas Bank Ltd, Federal Bank Ltd, Tamil Merchantile Bank Ltd did not respond to the questionnaire sent by dna.
'Banks should constantly upgrade processes and systems'
Ultimately fraud is like any other crime – the criminal attacks what he believes to be "soft" targets. Close attention and vigilance on the part of both banks and customers is therefore the best deterrence. For example, it is important that banks constantly review and upgrade their processes and systems to be as robust as possible. Equally, customers must safeguard things like their cheque books (to protect against the commonest type of physical fraud) and passwords (to protect against electronic fraud). They should not be gullible and fall prey to get rich quick schemes and phishing attacks.
Nowadays, most banks offer sms alert facilities - I strongly recommend that customers activate this facility, so that if there is any suspicious activity on their account they take immediate corrective action. The OTP facilities that are now mandatory for most credit cards and on line payments are also a very good fraud control measure.
Dormant accounts are a happy hunting ground for fraudsters - both banks and customers should monitor these closely. The above are a few illustrative (though not exhaustive) suggestions to control fraud.
—Meera Sanyal (former CEO & chairman of the Royal Bank of Scotland in India)
SMS said the money credited, but later bank went into denial
Santosh Dandharia, a petrol pump owner in Banda district of UP, alleges that he lost Rs 15 lakh as Allahabad Bank officials cheated him. On March 16, 2015, Dandharia deposited Rs 15 lakh in his account. Soon, he received an SMS stating that the money has been credited. The same evening, he received another SMS saying the transaction of Rs 15 lakh has not happened.
Dandharia checked his account and upon finding the money not credited contacted the bank officials, who said the money has never been deposited.
With bank looking the other way, he approached the police who registered an FIR against the bank officials. Dhandharia is yet to get back his money. " I really hope that I get it back. It's my hard earned money," Dhandharia said.
He lost the money his friends collected for cancer treatment
Hyderabad-based Nagaraju Kopula, 32, a former journalist with The New Indian Express and a cancer patient, lost Rs 1.23 lakh from his SBI account on March 3, 2015. Born into a poor family, Kopula was struggling to meet both ends meet since he was diagnosed for lung cancer in 2012. The money was collected by his friends and fellow journalists towards his treatment expenses.
Barely able to speak now, Kopula told dna in a trembling voice, "One day somebody called from SBI, asking for my account details. After that there was no trace of the money."
Nagaraju's friends complained to the bank but till now nothing has been recovered. Now with the money gone, Nagaraju is worried whether he will be able to survive any longer. " I don't know what will happen to me," he said.http://www.dnaindia.com/money/report-banks-no-safe-havens-for-your-money-2075581
Three sentenced to rigorous imprisonment for cheating Canara Bank-Times of India-10.04.15
A special court in Chennai on Tuesday sentenced two former officials of Canara Bank along with their accomplice to one year's rigorous imprisonment in a fraud case filed by the CBI.
According to the prosecution, the Anti-Corruption Branch of the CBI registered a case against chief manager of Canara Bank, Nungambakkam branch, K Srinivasan, manager (credit) Ammaiyappan, managing director of Dhanush Technologies Ltd Narayansamy and its director (finance) A V Srinivasan for fraud.
During 2005-2006, the accused entered into a criminal conspiracy to cheat Canara Bank. By abusing his official position, Ammaiyappan processed the personal loan applications of nine fictitious employees of Dhanush Technologies Ltd submitted by A V Srinivasan and Narayanasamy.
My Blog dated August 8, 2012 Is Reproduced below
Fraud and Manipulation Is Deep Rooted Culture
Culture of fraud is deep rooted in Indians. Fraud and manipulation are at the root of all successes barring a few exceptions. If a person enters into any government service by paying bribe or by using the source of some VIP or by using any unfair means as per demand of the situation, he is bound to promote fraud culture, he is bound to apply all tools to earn money and power by same brand of illegal means to gain money power, positional power and finally to become a attractive figure in the society. Similarly if a businessman or a trader has to pay bribe for starting and continuing a business he will tend to use unfair means to earn more and more wealth to perpetuate the corrupt culture.
This is why Banks incurred loss of about Rs.2000 crore in 2010, Rs.4000 crores in 2011 and Rs.2500 crores from January 2012 to June 2012 due to fraud committed by bank employees or by bank customers .It is important to mention here that these figure represents only those cases of frauds which caused loss to bank by amount more than Rs.1.00 in one cases. If the amount lost by bank in petty frauds i.e. cases involving less than one crore rupees , total loss caused by frauds to banks will be much more than banks appear to suffer loss due to bad assets.
As a matter of fact volume of fraud by number and by amount involved will go on increasing until the government stops mal practices prevalent in recruitment, promotion and transfers of services in banks and other government offices. Loss by frauds or by bad assets may be reduced to minimum not merely by strengthening control mechanism but by striking at the root of corruption wherefrom it originates.
It is also true that after the exposure of fraud of Mr. Harshad Mehta or Mr. Telgi or Mr. Raja or Mr. Kalamadi , the perception about loss has completely changes. Now a days loss of one crore or ten crore rupees by fraud or by bad lending caused to any bank or any organization is treated as very small crime and treated in a very casual manner. This is why CBI has instructed banks not to report the cases of fraud to CBI if the value involved is less than three crore rupees.
As a matter of fact government does not want to punish the evil doers but want to punish those who raise voice against the evil doers. This is why the person who report the cases of fraud with the system or who report the incident of corruption or any crime is taken to task not only by the evil doers who are exposed but by the protecting agencies like police , CBI top officials and ministers forming part of the government.
Government did not try to understand the exposure made by Team Anna and neither they thought it fit to frame strong Lokpal but they left no stone unturned to torture key members of Team Anna on flimsy grounds and puncture the movement.CBI or nay top officials who try to precipitate real criminal by their devoted and sincere investigation are transferred to remote places so that the prime evil doers are saved from further exposures. Similarly judges in courts and top officials in all departments are removed from the post if they make efforts to reveal the truth of the system.
CBI does not get time to devote on cases related to ministers and VIPs but have enough time to trap Bal Krishna , disciple of Ramdeo Guru and they got success in sending him to jail without loss of much time.CBI did not not think it fit even to penalize Passport officer in the same way as Bal Krishna was.
It is the tradition and it is the strategy of the top ranked officials to save bad persons and to punish good persons. This is why they do not like to act and respond on anonymous complains, anonymous emails or anonymous message even if they contain serious facts of fraud and manipulation with the system. Top officials try to investigate who are sending anonymous complains to expose the truth but never tries to look into the truth hidden in such messages. Police starts torturing the person who go for lodging FIR against any VIP because they know it is VIP who may help them in trouble or when their misdeeds are exposed by media or any crusader or any whistle blower.
This is why honest speakers do not want to speak the truth of frauds or any crime incident to police or CBI or any investigating agency. Everyone knows that the people who speak against criminal are to face the torture of the system.
Further government also makes all efforts to weaken the capacity of police, CBI , Court and all agencies which are meant to provide justice and punish evil doers .Government will never provide adequate manpower and infrastructure to these protecting agencies so that they may not pursue the cases of fraud or any crime to its logical conclusion.
This is why lacs and crores of cases against actual criminals, evil doers and fraud committers are pending in Indian courts and in topmost offices of CBI or CVC and on the contrary lacs of innocents accused of crime are languishing in jail waiting justice by court or by CBI or CVC.
It is pity that an officer who is entrusted to prevent corruption is not provided proper infrastructure whereas those who are master in fraud and crime are provided all support and all infrastructures.
It is further disheartening that in the current era of information and technology when most of the works are done online and on computers, adequate policies and tools are not developed to prevent misuse of technology. More disheartening is the fact that all departmental heads and the government in general look into academic qualifications of the person, his flattery quality and his appearance before recruiting him or and before elevating him or her to higher post attracting higher responsibilities. Character of the person has either become the last point or has become NO-POINT at all levels. This is why I usually say that the culture of fraud and manipulation is deep rooted and the culture of flattery and bribery irrigates and promotes the same.
If at all government want to reduce level of corruption prevalent in government offices, they have to fight it out on all fronts
Ensure Quality education (Stop Giving jobs of teachers on recommendation of VIP or through bribe).
Ensure honesty in recruitment, promotion and positing in all offices and in all departments (stop recruiting inspectors on payment of bribe).Stop promotion of flattery culture.
Ensure timely punishment to evil doers after quickest investigation into all types of allegation and all acts of fraud including that in Human Resource Department. Punishment to evil doers should send a message to all that if they commit crime they will face the same consequences.
Ensure all protection to those who expose the fraud, who informs the facts of crime and who tries to awaken the system of persisting irregularities.
Unfortunately, most of the key posts are manned by corrupt persons and hence they make all efforts to close the files of evil doers if willingly or unwillingly the evil works of him or her is exposed by any person or any group or by media. Who will then bell the cat?
The greatest tragedy of our country is that there are hundreds of sympathizers of a person whose evil works are exposed and who are likely to be punished. There are hundreds of well wishers who make all efforts to save such evil doers from punishment. On the contrary there are none to save an innocent person who is wrongly or under a conspiracy by a team of evil doers is falsely alleged of evils and who is punished for none of his or her fault.
There are persons in all offices who ridicule and who laugh at a person who advocate honesty and who try to ensure justice or try to punish who perpetuate reign of injustice.
after the launch of reformation era in 1991 when banks were given complete freedom to recruit and promote strictly as per their choice in the name of merit and recruit and promote fully based on their whims and fancies they forgot to verify the credentials of officers and staff joining the bank.
Before that, banks used to get credentials of a new recruit got verified by two valued persons of his locality. Now these banks ask for police report which is obtained by payment of a few pieces of five hundred rupee notes. This is why persons with doubtful integrity has entered into various banks and they managed timely and before time promotions by managing their bosses by offering what bosses liked , it may be any of WWW or all three WWW.
Due to this ,persons of bad integrity not only entered into bank but could reach upto even highest level and that is why volume of fraud and bad assets have gone unchecked and now appears to be beyond control and have crossed all prudential limits set by RBI or GOI
http://importantbankingnews2.blogspot.in/2015/03/bank-fraud-rs11022-crore-breaks-all.html
CORRUPTION - THE BURNING ISSUE OF THE DAY
BY
Danendra Jain
How to end corruption
Prompt justice, prompt punishment to guilty, prompt registration of FIR in Thana and prompt action by police personnel, prompt movement of files in all offices, election and recall of public representatives and so on…. All these are possible only when the culture of flattery and yesmanism is stopped completely.
Honest workers have always fear of wrong posting and rejection in promotion processes if they do not flatter their bosses or bribe them.. Honest person fear in knocking the door of police station or court because everyone knows that police and court people torture all who do not pay them their fees called as bribe. People fear in raising voice against injustice because they know there is none to support him in the system. As long as honest, loyal and devoted workers have fear of repercussion or rejection in promotion or posting at critical places in their mind, as long as rules are not made completely transparent, non discriminatory and linked with seniority and as long as justice is delayed in judiciary we cannot imagine of end of corruption from India, we cannot dream of reducing the proportion of corrupt practitioner among government officers.
Rules and laws should be made so much stringent and effective that it leaves no scope for whimsical decisions, arbitrary promotions and arbitrary posting in any offices. New rules should be framed to ensure punishment to top officers who take arbitrary and discriminatory decisions .Everyone should have in mind that punitive action will invariably be taken against guilty person quickly without any bias. Only then culture of flattery will end and a reign of justice will prevail and the proposal of Right to Recall will be successful.
Producing fear of quick and severe punishment in the mind of evil doers is the only key to reduce rate of bribe or corruption in government department Workers in general of all officers, departments, Thanas, courts PSUs, PSBs will perform honestly, sincerely and in the best possible manner only when there is a fear of action for poor or non performance.
Why top ranker officers not suspended
Why not General Manager, Executive Directors and CMD of banks and financial institutes are suspended till date even though they were found to be involved in Bribe based lending scam exposed by CBI. Why assets of such corrupt officer has not been seized till date. Why has CBI not raided their house and seized their properties.
On 24th November CBI charged several high rank officers of bank and LIC housing Finance Company of lending huge money to real estate builders after taking bribe. Several banks have been charged of wrong lending in case of 2G spectrum related case .Even Supreme Court has passed adverse remarks against bankers. When top bankers are corrupt there is no doubt that a culture of corruption is wide spread in that bank in particular and in PSU banks in general. Still RBI, Ministry of Finance and government of India as a whole is silent on taking punitive action. Had it a been a clerk or a simple officer, top management could have suspended him immediately.
Is Finance Minister not responsible and accountable for selection of wrong and corrupt ED and CMD for a bank? Why General Manager rank officers alleged to be involved in corruption and charged by CBI are allowed to continue in their post or even promoted is a million dollar question. It speaks how much deep rooted is the cancer of corruption in the banking system in particular and in government departments in general.
Banks ask for equivalent or even more amount of collateral security and guarantors even for financing a few lac or a few crores of rupees to common business men. But they thought it safe to finance thousands of crores of rupees to telecom companies. Why?
If there is a will there is a way If CVC really desires that corruption should end I suggest that CVC should immediately carry out raids on the premises of all vigilance officials, all CBI officials and all senior IT officials and try to assess and ascertain their assets and liabilities in comparison to their actual earnings.
In the second phase they should assess the wealth of ministers (state as also central) and arrange immediate punishment to guilty ministers and all guilty officers without much delay and latest by one year.
Success is inevitable if honest search is initiated from top level. CVC may declare their email address in all offices and act upon genuine emails quickly and arrange quickest punishment to actual guilty.
All offices should exhibit their email address for lodgment of complains online and they should ensure that all mails received via email are attended promptly and guilty are punished after ascertaining the truth of complains.
This is a simple message on the occasion of Anti Corruption Day. I hope cancer of corruption will end if honest action is taken in right direction.
Address diary containing Email addresses of all prominent officers and important offices for all districts and for entire state and the country should be published by government and distributed free of cost or sold at a reasonable price so that every person can at least lodge his grievance to appropriate authority. Then there should be monitoring cell that will ensure timely action without any bias to anyone. Every guilty must be punished in a period of maximum three months.
If there is a will there is a way.
If CVC wants results he can get grant success if he moves in right direction.. Email addresses may be effective tool for common men Government of India has provided laptop and computer facility to all Members of Parliament. All MPs and Ministers have been allotted separate Email addresses. All Secretary, joint secretary and departmental heads have also been provided with laptops and desktops in offices and also in their personal residences .Most of high rank and important officials have their own email addresses for communicating with their higher or lower level offices.
But the fact is that almost none of MP is using his laptop, looking into his mails or using internet to communicate with his friends or voters .They never want that their peace be disturbed by common men’s mails. None of government officers reveal their mail address to common men because they fear that common men can expose their corrupt system of working and directly attack on the culture of bribe going on in all offices.
If government of India instructs every MP to use internet facility and respond to email received from voters and common men of his constituency I think many problems of voters will be solved in the shortest span of time.
Similarly email addresses of all important departments including police departments and judiciary must be made active so that common men without any fear of repercussion lodge their grievance with appropriate authority.
Email addresses of all important dignitaries of the district, of the states and of the central government should be displayed at all prominent places. Common men should be provided a common cyber café for lodging their complains as also their valued suggestions for the development of the area.
It is possible that many mail received through internet are not genuine. There will be some useless mails too. One has to sort them on daily basis and to avoid misuse of mails one has to make provision for punishment to person who misuse mail addresses.
Email based communications between citizen and administrative officials through such advanced technology helps in knowing the pulse and problems of the voters, helps in quick redressal of public grievances and also helps in extending quickest remedy to their own problem.
Hitherto all departments use to display address for communication but unfortunately the concerned officials never bother to spare time to go through the contents of complains and act upon them. All are busy in earning bribe and making wealth through ill earned mean. This is why government of India does not want to increase headache by inviting more and more complains through emails.
But if government really wants to increase use of advanced technology and increase density of internet users in the country they have to make it the most helpful tool in the hands of real consumers. Government can even cure the cancer of corruption and minimize the pain of common men who are victim of corrupt system.
It is however necessary that all concerned official and Ministers seriously act upon mails received by them. Otherwise the entire exercise will prove futile.
If they simply read and delete the mail or forward the mails to some other officers without knowing the fate thereof, outcome will be zero. Our Prime Minister forwarded the complains of Mr. Subramaniam Swami to Ministry of Telecommunication in connection with corruption involved in allocation of 2G spectrums and never tried to know the fate of his valued advice. In this way he caused huge loss amounting to lacs of crores of rupees to Indian exchequer. As such it is needed to frame stringent laws to regulate Email and to make it effective and useful. In fact, it is the need of the hour to frame hardest laws immediately to stop recurrence of incidents like hacking of CBI website by Pakistani hackers which happened last week.
Every mail should be properly acted upon and if possible there should be one monitoring agency to monitor and watch whether all officers are actually *********** Who will stop bad bankersIn banks and other government offices, only those officers who has some Godfather at higher level controlling offices can only prosper quickly and reach up to top post. This is why I use to say top bankers are almost bad bankers. It is only bad bankers who know how to speak, how to attract bosses, how to please top bankers, how to please ministers, how to keep happy banking division and how to show attractive balance sheet. Only manipulation masters and hard core liars can survive with dignity in banks.
Officers who can lend to big but bad businessmen and earn a lot of gifts in cash and kind can only please his bosses and can go up and up in his career and get cream posting .Now slowly bad effects of lobby banking is getting exposed and one after other scam is coming in news. But who will cure the real disease, only God knows. Because all are birds of the same feather.
Here it is necessary to make t clear what is lobby banking. All corrupt officers use to have some connections in all controlling offices who take care of all his evil works and save him in time of crisis. Such corrupt officers have strong lobby at top level offices that can manage even RBI, Banking Division, CBI, vigilance officials and as a result they can get rid of punishment when their evil works are exposed by inspecting team or by aggrieved public. Even courts are in modern days used to get safety from immediate punishment. Rather I will say court cases are used not to award justice but to perpetrate reign of injustice. Such officers contact their own lobby members to manage promotion in promotion processes and also manage posting of his own choice.
Loans given by banks (particularly by PSU banks and star performer banks) to every sector become bad in a year of two or maximum five years. It is not that the policy of lending is bad but it is due to the fact that men chosen for lending are bad,.
In banking prior to reformation i.e. prior to 1991 loan accounts used to become bad at least after a gap of 15 to 20 years and that too in unison with growth cycle of uptrend, stagnation and downtrend in business. In modern days banking, Managers are chosen not to make good lending but to earn money through lending and please higher bosses.
As a matter of fact Non performing officers have become top executive by virtue of their master in art of building lobby and their master degree in manipulation of facts and figures and hence Non Performing Assets in banks are growing fastly and coming out of hibernation.
In government offices at least promotions take place as per seniority, but in banks promotions are based on the whims of top bankers. This is why culture of flattery is more prominent in banking than in other government
http://www.allbankingsolutions.com/Articles/Articles-DJ-Evergreen-loans.htm
Click Here To Read PS banks Gnerate Bad Assets to Serve Their Self Interest
http://jaindanendra.blogspot.in/2014/08/number-of-credit-scam-increasing.html
http://importantbankingnews.blogspot.in/2014/08/scam-in-bank-or-bank-in-scam.html
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