Unpublished data shows India’s fraud problems extend far beyond PNB and initial billion dollar fraud

Investors may have been shocked when one of India’s biggest banks disclosed a $1.77 billion fraud by a billionaire jeweler, but the central bank has recorded data that shows the problem runs far deeper and wider.
Reserve Bank of India (RBI) data, which a Reuters reporter obtained through a right-to-information request, shows state-run banks have reported 8,670 “loan fraud” cases totaling 612.6 billion rupees ($9.58 billion) over the last five financial years up to March 31, 2017.

In India, loan frauds typically refer to cases where the borrower intentionally tries to deceive the lending bank and does not repay the loan.

The figures expose the magnitude of the problem in a banking sector already under pressure after years of poor lending practices. Bad loans surged to a record peak of nearly $149 billion last year.

Bank loan frauds have steadily increased as well, reaching 176.34 billion rupees in the latest financial year from 63.57 billion rupees in 2012-13, according to the data, which doesn’t include the PNB case.

Punjab National Bank, India’s second-largest state lender, said on Wednesday two junior officers at a single branch had illegally steered $1.77 billion in fraudulent loans to companies, most of them controlled by billionaire jeweler Nirav Modi. It was India’s biggest fraud ever.

“This might be the tip of the iceberg or the middle, and that is the worry,” said Pratibha Jain, partner at law firm Nishith Desai Associates, who advises on bankruptcy cases.

“The fact is we don’t know what else is out there.”

Read the original story over at Reuters.

This story was summarized by Canadian Fraud News Inc.

Devin Jones is the head writer and social media producer at Canadian Fraud News. Devin was raised in Toronto and is a graduate of the Ryerson University journalism program. As a former Digital Media editor at the Ryerson Review of Journalism, you can find Devin camera and coffee in hand, at his home photo studio.

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