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Billions lost to bank frauds
Oct 16, 2015

It is no secret that we endorse RBI as the kind of central bank that every economy should aspire to have. The manner in which the present and past governors of the central bank have averted one economic crisis after the other has left everyone in awe. But if we have to point out one grave error that the RBI has been neglecting for long, it is regulating the quality of management in banks. The PSU banks in particular are currently burdened with non recoverable loans of proportions not seen in years. There has been little or no penalty by the RBI on banks that have failed to sustain asset quality and protect the interest of depositors and shareholders. And now the glaring instances of fraudulent practices in several banks cast a shadow on effectiveness of the central bank.

The recent instance of fraud in Bank of Baroda, reminds us of the money laundering cases in 2013, revealed by Cobrapost. Since then, the RBI has not taken any meaningful measures to avert the growing instances of fraud. In fact by the central bank's own admission, the quantum of billions lost to bank frauds has been growing each year. And bank depositors could get increasingly nervous about the safety of their deposits without adequate action by the central bank.

Data source: RBI; Economic Times

This Chart Of The Day was published in The 5 Minute WrapUp - The Small Secret to Smallcap Investing

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