‘Financial frauds lethal parasites for economy’

Sinha on Friday asked banks to fast-track the process of reporting such instances to help the probe agencies crack these cases.  Sinha, Minister of State for Finance, also said that it is the public sector banks that account for a substantial chunk of the total amount involved in such cases.

“Another glaring issue in this context is the considerable delay in declaration of frauds by various banks in cases of consortium/multiple financing. We have on occasions observed more than 12-15 months lag in declaration of the same cases as fraud by different bank,” Sinha said. 

The Minister further said such delays “not only enables the borrower to defraud the banking system to a larger extent, but also allows him considerable time to erase the money trail and queer the pitch for the investigative agencies”.

Referring to the steps taken by the Government and the Reserve Banl of India to tackle the issue of frauds in financial sector, “a lethal parasite to economy of the nation”, Sinha said a concept of ‘Red Flagged Account’ is being introduced, which will alert the banks about a possible fraud before it is committed.