Business Sector
The business sector is worst hit when a scam or fraud hit bank suspends or stops operations. Companies that hold accounts in the scam-hit bank are affected since they might be unable to operate their accounts for regular transactions.
Hence, they’re unable to pay suppliers or receive money from customers unless they have secondary Current Account at some other bank.
As a result, a business might find itself unable to pay salaries or even rent for their offices or other facilities.
If we look at the broad picture, a bank scam or fraud affects the entire Indian society directly or indirectly.
How? Continue reading. I’ll show you with facts and figures how bank scams affect us.
Scams & Frauds Affecting Banks in India
If you think that frauds and scams are rare in India and happen occasionally, think again. Here’s why.
As many as 53,334 frauds hit banks in India from Financial Year (FY) 2009-2010 to FY 2018-2019, says the regulator, Reserve Bank of India. Banks in India lost whopping Rs.2.05 trillion due to these frauds and scams.
Major Public Sector Undertaking or nationalized banks, private and cooperative banks as well as the new generation Small Finance Banks were affected by scams and frauds, the RBI report adds.
During the first quarter (Q1) of FY 2019-2020, banks in India lost Rs.32 billion. This amount was lost in a short span of three months- from April 1, 2019 to June 30,2019, according to Reserve Bank of India figures.
By Q2 of fiscal year 2019-2020, the amount stood at staggering Rs.72.5 billion. About 90 percent frauds were at nationalized banks- which is something shocking.
Reasons for Bank Frauds
While every bank implements stringent rules and regulations prescribed by RBI, scammers and fraudsters often find a ways and means to overcome these.
Unfortunately, some scams and frauds also involve bank employees at various levels.
Given this scenario, you’ll definitely wonder: how safe is your money with banks in India. In this article, I will try and answer this important question.
There are countless reasons for bank frauds. These include lax vigilance of internal systems, frauds in Know Your Customer (KYC) documents by customers and lots more.
How Safe is Your Money at Banks in India?
Under existing laws of India, all commercial banks operating in this country- including foreign banks- have to get a license from the Reserve Bank of India and other relevant departments of the Indian government.
Therefore, every bank has to insure itself with the Deposit Insurance & Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India. Remember, no bank can operate in this country without an insurance from DICGC.
And DICGC plays a very important role to ensure your money is safe with banks in India. However, there’s a limit to the safety of your money with banks in India.
Role of DICGC & Safety of Your Money
DIGCG covers all your Savings, Current, Recurring Deposit, Fixed Deposit and every other account you hold at any bank in India.
However, DICGC will pay you only a maximum of Rs.100,000 per account if the bank has to close down for any reason.
Let me explain this further.
Getting Rs.100,000 from DICGC
Though DICGC insures every bank and their depositors, getting the Rs.100,000 or lesser usually takes some time. Therefore, I suggest you read these guidelines of DICGC to know how safe is your money with banks in India.
Firstly, you’ll get Rs. 100,000 for Savings, Current, Fixed Deposit and Recurring Deposit only if you have that much amount or more in the account. Meaning, if you have only Rs.10,000 in your account, you will get only Rs.10,000 or so. However, if you have Rs.1 million in a single account, the maximum you’ll get is Rs.100,000 only. You won’t get any interest. And you will lose the remaining Rs.900,000.
If you have more than one account at the bank, the DICGC will pay Rs.100,000 or lower for every account. That’s because every account has separate insurance. For example, if you have one account with Rs.150,000 deposit and another with Rs.10,000, the maximum you’ll get is Rs.100,000 for the first and Rs.10,000 for the second.
Secondly, the bank will not pay you the money directly. Instead, the liquidator or organization that a court appoints will process your claim and pay the money. This money comes from DICGC. Therefore, you will not get money directly from DICGC either.
Thirdly, the amount of Rs.100,000 or lesser will be paid within two months of the closure of the bank. The process to close a bank is pretty long. This means, it’s only when RBI declares
Business Sector
The business sector is worst hit when a scam or fraud hit bank suspends or stops operations. Companies that hold accounts in the scam-hit bank are affected since they might be unable to operate their accounts for regular transactions.
Hence, they’re unable to pay suppliers or receive money from customers unless they have secondary Current Account at some other bank.
As a result, a business might find itself unable to pay salaries or even rent for their offices or other facilities.
If we look at the broad picture, a bank scam or fraud affects the entire Indian society directly or indirectly.
How? Continue reading. I’ll show you with facts and figures how bank scams affect us.
Scams & Frauds Affecting Banks in India
If you think that frauds and scams are rare in India and happen occasionally, think again. Here’s why.
As many as 53,334 frauds hit banks in India from Financial Year (FY) 2009-2010 to FY 2018-2019, says the regulator, Reserve Bank of India. Banks in India lost whopping Rs.2.05 trillion due to these frauds and scams.
Major Public Sector Undertaking or nationalized banks, private and cooperative banks as well as the new generation Small Finance Banks were affected by scams and frauds, the RBI report adds.
During the first quarter (Q1) of FY 2019-2020, banks in India lost Rs.32 billion. This amount was lost in a short span of three months- from April 1, 2019 to June 30,2019, according to Reserve Bank of India figures.
By Q2 of fiscal year 2019-2020, the amount stood at staggering Rs.72.5 billion. About 90 percent frauds were at nationalized banks- which is something shocking.
Reasons for Bank Frauds
While every bank implements stringent rules and regulations prescribed by RBI, scammers and fraudsters often find a ways and means to overcome these.
Unfortunately, some scams and frauds also involve bank employees at various levels.
Given this scenario, you’ll definitely wonder: how safe is your money with banks in India. In this article, I will try and answer this important question.
There are countless reasons for bank frauds. These include lax vigilance of internal systems, frauds in Know Your Customer (KYC) documents by customers and lots more.
How Safe is Your Money at Banks in India?
Under existing laws of India, all commercial banks operating in this country- including foreign banks- have to get a license from the Reserve Bank of India and other relevant departments of the Indian government.
Therefore, every bank has to insure itself with the Deposit Insurance & Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India. Remember, no bank can operate in this country without an insurance from DICGC.
And DICGC plays a very important role to ensure your money is safe with banks in India. However, there’s a limit to the safety of your money with banks in India.
Role of DICGC & Safety of Your Money
DIGCG covers all your Savings, Current, Recurring Deposit, Fixed Deposit and every other account you hold at any bank in India.
However, DICGC will pay you only a maximum of Rs.100,000 per account if the bank has to close down for any reason.
Let me explain this further.
Getting Rs.100,000 from DICGC
Though DICGC insures every bank and their depositors, getting the Rs.100,000 or lesser usually takes some time. Therefore, I suggest you read these guidelines of DICGC to know how safe is your money with banks in India.
Firstly, you’ll get Rs. 100,000 for Savings, Current, Fixed Deposit and Recurring Deposit only if you have that much amount or more in the account. Meaning, if you have only Rs.10,000 in your account, you will get only Rs.10,000 or so. However, if you have Rs.1 million in a single account, the maximum you’ll get is Rs.100,000 only. You won’t get any interest. And you will lose the remaining Rs.900,000.
If you have more than one account at the bank, the DICGC will pay Rs.100,000 or lower for every account. That’s because every account has separate insurance. For example, if you have one account with Rs.150,000 deposit and another with Rs.10,000, the maximum you’ll get is Rs.100,000 for the first and Rs.10,000 for the second.
Secondly, the bank will not pay you the money directly. Instead, the liquidator or organization that a court appoints will process your claim and pay the money. This money comes from DICGC. Therefore, you will not get money directly from DICGC either.
Thirdly, the amount of Rs.100,000 or lesser will be paid within two months of the closure of the bank. The process to close a bank is pretty long. This means, it’s only when RBI declares
