Indian banks lost a huge amount of Rs 4,448 crore to frauds in the last financial year. Finance Minister in response to the parliament query said, "According to the Reserve Bank of India's (RBI) record, the incidents of fraud reported by the banks during FY12 were 5,569 cases involving an amount of Rs 4,448 crore".
The statement mentioned that major frauds included of loans sanctioned for purpose other than the purpose of which they were sanctioned, lack of diligence by the banks and direct sales agents, fake tittles submitted as collateral security and disposal of assets created by loans without knowledge of the bank.
"The banks had not carried out the pre-sanction inspection of property for the acquisition of which the loan was being sanctioned to ascertain if the unit/ property really existed", as mentioned in the statement.
In some cases, borrowers submitted fake documents related to ‘know your customer' and could not be found at the given addresses after the release of the loan amount. Banks was also duped by submission of fake and fabricated financial statements and salary slips of the borrowers.