Banks Recorded Rs 1 Tn In Fraud-Related Write-Offs

State Bank of India's Chairman, Dinesh Khara, stated that the Reserve Bank of India's Asset Quality Review of 2015 has effectively fulfilled its purpose, signaling the end of the 'loan write-off era'.

Banks collectively wrote off more than Rs 1.01 trillion due to fraud since the financial year 2015-2016, averaging around Rs 13,000 crore annually, according to the reported fraud dates.

In FY16, banks registered approximately Rs 3,000 crore in write-offs, constituting 0.04 per cent of the total credit that year. Comparatively, write-offs due to fraud accounted for 0.03 per cent of the total credit in FY23, although the overall figure was higher than in FY16.

Between FY19 and FY23, banks wrote off over Rs 10 trillion, with fraud-related write-offs amounting to 9 per cent of this sum.

State-owned banks reported 80 per cent of the total fraud-related write-offs in FY16, whereas private banks accounted for 12 per cent. However, this dynamic shifted significantly in FY21, with state-owned banks contributing only 14 per cent and private banks dominating at 79 per cent.

By FY23, private banks were responsible for 74 per cent of the fraud-related write-offs, while state-owned banks accounted for 24 per cent.

Despite the total number of bank frauds increasing from 6,800 in FY19 to over 13,500 in FY23, private banks' share in these occurrences rose from 34 per cent to 66 per cent.

During this period, the financial involvement in these frauds decreased from Rs 71,500 crore to Rs 30,200 crore.

Although the overall amount involved in all bank frauds had surpassed Rs 1 trillion in FY20 and FY21, private banks' share in the financial amount linked to these frauds escalated from 10 per cent in FY19 to 30 per cent in FY23.

Loan-related frauds constituted 30 per cent of all bank frauds in FY23, with loans accounting for 95 per cent of the total financial involvement in these frauds.