Rs 95,000 Cr Fraud Within 6 Months: Why PSU Banks are Suffering

Rs 95,000 Cr Fraud Within 6 Months: Why PSU Banks are SufferingBy TheQuint

Video Editor: Mohd Irshad Alam
Video Producer: Kaushiky Kashyap and Hera Khan
Cameraperson: Mukul Bhandari

On 19 November, in Rajya Sabha, Finance Minister Nirmala Sitharaman revealed that in the first 6 months of this financial year, that is between April and September, fraud worth Rs 95,000 crore took place in public sector banks.

Scams worth more than Rs 1,000 crore come to notice after nearly 4 years.

According to the Reserve Bank of India, a total of 5,743 fraud cases have taken place in public sector banks between 1 April 2019 and 30 September 2019, most of which occurred in the last few years. However, 1,000 cases worth 25 billion rupees have occurred recently.

The condition of the banking sector is bad. People are not ready to give or take loans. Around 9.5 lakh crore rupees are caught in the system as NPAs. Even government payments have stopped. In such a situation there is a danger of SME loans turning into NPAs.

We need to recover PSU bank money to lift India out of economic slowdown. Credit flow needs to start.

It was believed that the implementation of the Insolvency and Bankruptcy Code (IBC) would speed up the recovery process of banks' stranded debts and strengthen the financial condition of banks, but the benefit of IBC was not seen. According to the IBC there are 2,500 cases pending. And after 3-4 years of hard work there has been only 37% recovery.

It’s a concerning fact that the post of chief executive of two big state-run banks in the country has been lying vacant for the last one month.

Telecom, real estate, renewable power, and road sector banks are in danger of housing new NPAs. In such a situation, banking crisis will increase, and turning the economy around will become even more difficult.