In its recent financial stability report (FSR), the Reserve Bank of India (RBI) said that 90.6 percent of the frauds reported by banks in the financial year 2018-19 (FY 19) occurred between FY01 to FY18, indicating a significant delay in detection.

"There is a significant time-lag between the occurrence of a bank fraud and its detection," RBI said. To understand the pattern, the central bank took into account frauds with amounts involving over Rs 1 lakh reported during the last 10 years.

"It was observed that in many cases frauds being reported now were perpetrated during earlier years. The recognition of date of occurrence is not uniform across banks," it said.

Considering this observation, RBI is planning on reviewing its master direction on frauds and introduce additional measures to recognise their occurrence in a timely manner and implement quicker enforcement action against such violations.

The central bank also observed that frauds related to loans continued to be dominant, constituting an aggregate of 90 percent of all frauds reported in FY19 by value. Further, in this category, cash credit, working capital loan frauds dominated in the public-sector whereas retail term loans (non-housing) mainly contributed to such frauds among private banks.

Additionally, as on 31 December, 2018, 204 borrowers who had been reported as fraudulent by one or more banks were not classified as such by other banks having exposure to the same borrower.

RBI noted that one of the major areas of non-uniformity in processes across banks was in identifying Red Flagged Accounts (RFA).

"In several cases, banks are unable to confirm RFA tagged accounts as frauds or otherwise within the prescribed period of six months. As per central repository of information on large credits (CRILC) data, at the end of 31 March, 2019, the RFA reported by banks exceeded the stipulated six-month period in 176 cases," it said.