Fraud reporting is often a matter of perception

In a recent lecture, the RBI Deputy Governor, K. C. Chakraborty, said over 83 per cent of the cumulative losses of Rs 29,910 crore due to frauds occurred at public sector banks. The data given by the Deputy Governor also show that over 94 frauds involving a sum of over Rs 50 crore each were reported by nationalised banks, including SBI, in the 2009-10 to 2012-13 period.

Private sector banks, on the other hand, reported only six such cases and foreign banks, three. Chakraborty attributed this to deficient appraisal system, poor post disbursement supervision and inadequate follow-up. The implication is that private and foreign banks are far ahead in these aspects. The statistics have to be viewed in the context of the environment in which the banks operate.

The dividing line between delinquency in a loan account and frauds is very thin. The accounts which are viewed as delinquent by private sector banks are often viewed by public sector banks as frauds and reported as such. The state-run banks come under the purview of the Central Vigilance Commission (CVC) and the CBI , whereas private and foreign banks do not.

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