What are the steps being taken to prevent the banking frauds?

Indian banking sector is in a neck deep crisis. A RTI reply has shown that public sector banks (PSBs) reported 8,670 cases of loan fraud involving Rs61,260 crore over the last five financial years.
Various steps have been taken to prevent the frauds:

• PSBs have been asked to inspect all bad loan accounts above Rs50 crore.
• PSBs have been given 15 days to address technological and operational risks and put the house in order.
• PSBs have been asked to rationalize overseas operations.
• Cabinet has approved the new Fugitive Economic Offenders Bill for introduction in parliament.
• Proposal to establish National Financial Reporting Authority(NFRA) as an independent regulator for the auditing
• An expert committee to look into rising instances of fraud. 
• Mandatory reporting of the stressed accounts above Rs5 crore on a weekly basis.

These proposals are a welcome step to strengthen the banking sector of India. But while strengthening these regulatory measures care must be taken to ensure:

• It would not lead to over-regulating or overburdening the banking system. The bankers would adopt a risk adverse attitude to avoid the institutions of 4C (Court, CVC, CBI and CAG). It is important that bankers are protected adequately and are provided with a condusive environment to be able to take commercial decisions.
• Laws don’t work by themselves. Laws need to be supported by institutions with investigatory and judicial capabilities so that cases are decided in a reasonable time frame. It’s not severity of the punishment but its surety of punishment which will act as deterrent.
• Governance reforms of PSBs. Overhauling the Bank Board Bureau and providing it with a structured mechanism for enhancing the efficiency of the banking system.

The recent scams have brought out various lacunas and loopholes of our banking system. This must be taken up as an opportunity to restructure and strengthen our banking system.