Thursday, 13 November 2008

After slowdown, now frauds hit India Inc, says KPMG

Banks might see their bad debts rise in the days ahead not because of the economic slowdown, but because they were hoodwinked by applicants, with cases doubling in the last six months compared to a year ago.

"We have seen the number of cases of fraud that we monitor double in the last six months over the same period last calendar year," KPMG Head (Forensic service) Deepankar Sanwalka told PTI.

The resultant Non-Performing Assets are not because of a bad credit decision, but because documentation was not complete or false information was furnished, the loan could not be recovered, he said.

Sanwalka said Indian industry was not prepared to deal with fraudulent practices that has come to hit it now.

"There was a franctic expansion in the last four years. But controls did not keep pace. Business expansion took precedence over getting control systems in place," he said.

As companies look to cut costs further, the firms might be again overlooking to plug such loopholes that might result in monetary losses, he added.

According to a KPMG study released earlier this year, 11 per cent of the organisations surveyed had estimated financial losses in the range of Rs one to 10 crore, while five per cent of them had losses exceeding Rs 10 crore, which was directly attributable to the frauds detected.

Source: EconomicTimes

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