Bank Fraud: Govt reveals ₹1.42 lakh crore lost in 5 years; how much money has been recovered?

Bank Fraud: The government has disclosed that cases of bank fraud amounting to over ₹1.42 lakh crore have been reported across the country's banks and financial institutions over the past five years. A total of 7,173 FIRs have been registered in connection with these cases.

Bank Fraud News: A shocking revelation regarding the country's banking sector has been made in Parliament. According to data presented by the Ministry of Finance last Tuesday, fraud cases exceeding ₹1.42 lakh crore (specifically ₹1,42,112 crore) have surfaced in the country's banks over the last five years. Of this amount, only 4.5% (₹6,389 crore) has been recovered.

In a written reply to a question in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary stated that these figures are based on information received from the Reserve Bank of India (RBI). The data encompasses commercial banks—including Public Sector Banks (PSBs), private sector banks, foreign banks, small finance banks, payment banks, local area banks—and All-India Financial Institutions.

What else did the government say regarding recovery?

Responding to questions about the total amount involved in bank fraud and the sum recovered, the Minister of State for Finance noted that recovery efforts regarding the accounts involved in fraud are an ongoing process.

According to RBI data, banks have recovered a total of ₹6,389 crore from such fraudulent accounts over the past five financial years. Regarding action taken against willful defaulters, the Minister stated that the RBI does not maintain records of specific actions initiated against such borrowers. However, based on information provided by public sector banks, significant legal and recovery-related measures have been undertaken as of March 31, 2026.

Banks Take Strong Action

The government stated that public sector banks (PSBs) have filed 15,577 recovery cases against wilful defaulters. Additionally, proceedings under the SARFAESI Act have been initiated in 10,894 cases, while 7,173 FIRs have been registered against wilful defaulters.

Why is the recovery rate so low?

It typically takes banks 2 to 5 years to detect a major fraud and officially classify it as such. Taking advantage of this delay, the accused often transfer funds through a network of shell companies or move them to foreign banks. Alternatively, the proceeds of the fraud are used to purchase *benami* (proxy-owned) assets or cryptocurrency. Furthermore, factors such as lengthy legal procedures, protracted litigation, and delays in freezing accounts or selling assets slow down the recovery process and prevent the full amount from being recovered.