The Central Bureau of Investigation (CBI) has registered two cases out of the five complaints by IDBI Bank for pisciculture loans approved from FY 2009 to FY 2013. The 772 crore fraud has sent share prices falling on the stock exchange. It is reported that some industrialists obtained these loans through fake lease documents and even non-existent facilities like artificial ponds needed for fish farming.

Major lapses by IDBI officials

On Tuesday, IDBI Bank disclosed that there were some major lapses in verifying the authenticity of documents and even the value of the collateral was inflated to sanction these loans to the farming industry.

The news comes as another in a series of recently disclosed bank frauds by PNB, SBI and Canara Bank. The customers, meanwhile find it difficult to know which institution to trust in the current pattern and fear of losing their hard-earned money. The Reserve Bank of India (RBI) who is the topmost regulator for all banks has defended itself by saying that it has limited power over the control of public sector banks. Fortunately, in the case of IDBI, officials say, these loans were backed up by 100 percent provisions and it would not risk the profitability of the institution.

IDBI pursuing all possible legal action against these individuals

To investigate this fraud, IDBI has initiated all possible legal action to make sure these individuals are held accountable for the fraud.

A quality assurance audit is likely to be completed by the end of April 2018, to ascertain what lapses resulted in such an enormous fraud. The fraud is related to five branches of the bank in the state of Andhra Pradesh, Basheerbagh, Guntur, Rajahmundry, Bhimavaram, and Palangi. The CBI has currently registered the case for two branches in Basheerbagh and Guntur and is yet to register cases against the other three.

The banking industry is not so lenient to ordinary individual borrowers and will take legal action if they miss a few installments. Practically every bank in India is now computerized and certain steps are taken to check the full authenticity of documents submitted by ordinary borrowers. The question then is, how is it that such frauds involving huge amounts of money take place?

What type of loopholes exist that allow frauds in the banking industry? If no proper mechanism is created for stricter monitoring of loan procedures, we may discover many such frauds even in the future. Where does this leave the common man who finds it difficult to get loans for a simple and honest business idea? The bank's reputation takes a serious beating in this eventuality and creates major distrust in its money-lending mechanism.