Fraud: 'Indian economy lost Rs 6,600 cr'
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Different types of frauds may have caused Rs 6,600 crore loss to Indian economy in the last fiscal and banks were the most common victim in swindling cases, a report by Ernst & Young has said.
"What we found alarming in this edition was that insider enabled fraud accounted for 61 per cent of the reported fraud cases in this edition," Ernst & Young India Partner and National Director Fraud Investigation and Dispute Services Arpinder Singh said.
According to the first edition of Ernst & Young's Fraud Indicators in India, the magnitude of frauds in the second half of FY2012 increased by 36 per cent over the first half, while the number of frauds rose by a mere 8 per cent during the same period.
The report look into frauds in all spheres of society, including business and government segments, as well as in the case of financial institutions and individuals.
"Businesses are continuously exposed to fraud risks, with losses recorded in this edition accumulating to around Rs 6,600 crore," the report said.
A thorough research using various databases was conducted on a total of 1,80,000 news reports for FY12 to represent an analysis on frauds that took place in businesses, government, financial institutions, E&Y said.
Around 63 per cent of the total fraud cases in FY12 were reported in the financial services sector, banks being the most common victim of frauds followed by insurance and mutual fund companies.
The report revealed that losses incurred by banks due to fraud increased by 88 per cent in 2010-11 to exceed Rs 3,790 crore (more than Rs 2,010 crore in 2009-10).
79 per cent of the major fraud cases (majority cases above Rs 100 million) were due to involvement of senior management of the company owing to their authority and direct interference in the company's decisions.
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