The arc of bank frauds keeps expanding. First it was Punjab National Bank (PNB). Then it was State Bank of India (SBI). Union Bank of India followed. And now IDBI Bank Ltd has said five of its branches in Andhra Pradesh and Telangana were defrauded through the issue of loans worth Rs772 crore for fish farming. It seems the borrowers provided lease deeds for fish ponds that did not exist. The value of other collateral was also inflated.

It is now increasingly clear that the Nirav Modi case was not a stray example. Banks have given loans to shifty enterprises. Officials in bank branches collaborated with borrowers to carry out the frauds. All these examples show that the problem is not just due to weak regulation by the Reserve Bank of India (RBI) but also flimsy internal controls at banks.

Depositors tolerate the opacity of the banking business because of an implicit trust that bankers can spot lending opportunities better than individual savers. There is a danger that the frauds could undercut this confidence—and public savings will seek other avenues.