The Hindu Editorial Vocabulary– Apr 20, 2021; Day 42

Today we have collated the 10 tricky words/phrases/terms from the editorial on credit-related corporate frauds. Go through these words and see how many did you know already. Check their usage as well. This will surely help you to understand the sense the tricky words have conveyed in the editorial.

Difficult Word/ Phrase/ Term	Contextual Meaning/ Definition
Vulnerability	the quality or state of being exposed to the possibility of being attacked or harmed, either physically or emotionally
Diamantaire	diamond dealer
Extradition	the act of officially sending back somebody who has been accused or found guilty of a crime to the country where the crime was committed
Sour loan	an unsecured loan whose payment is 90 days or more overdue
Cognisance	knowledge, awareness, or notice
Bear the brunt of	Put up with the worst of some bad circumstance
Skew	suddenly change direction or position
Germane	relevant to a subject under consideration
Lament	express regret or disappointment about something
Malady	a disease or ailment

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Vulnerability (the quality or state of being exposed to the possibility of being attacked or harmed, either physically or emotionally) reminder: On credit-related corporate frauds

The RBI needs to ensure tighter oversight over large-value credit-related corporate frauds

The U.K. Home Secretary Priti Patel’s reported decision to allow fugitive diamantaire (diamond dealer) Nirav Modi’s extradition (the act of officially sending back somebody who has been accused or found guilty of a crime to the country where the crime was committed) to India, three years after state-owned Punjab National Bank admitted it had been defrauded to the tune of over ₹14,000 crore, serves as a reminder of the urgent need to address the banking system’s vulnerability to fraud. India’s lenders have had to contend not only with a sizeable share of sour loans (an unsecured loan whose payment is 90 days or more overdue) but also a growing number and cumulative value of frauds. The RBI noted in its latest Annual Report, in August last year, that the total number of cases of fraud (minimum size of ₹1 lakh) at banks and financial institutions rose 28% by volume and surged 159%, or more than 2.5 times, by value to ₹1.85-lakh crore in the 12 months ended March 31, 2020. While the ongoing COVID-19 pandemic may have likely slowed the cognisance (knowledge, awareness, or notice) of frauds since then, the trend from the preceding years is deeply troubling from multiple perspectives. With frauds mainly occurring in the loan portfolio, the RBI observed that there was “a concentration of large value frauds, with the top 50 credit-related frauds constituting 76% of the total amount”. Also, despite the central bank having created a framework to facilitate the prevention, if not early detection and prompt reporting of such frauds, the average lag in detecting these transactions was 24 months during 2019-20. And most disturbing was the RBI’s finding that in cases of sizeable fraud, where the sum involved exceeded ₹100 crore, the average lag was 63 months, or more than five years.

While the public sector banks (PSBs) have had to bear the brunt of (Put up with the worst of some bad circumstance) the hit from fraudulent borrowing — they accounted for an almost 80% share in 2019-20 — the private sector lenders outpaced their peers both in terms of number of cases and the increase in value of frauds. Even granting that fraud at a single private lender skewed (suddenly change direction or position) the increase in cumulative value of transactions that year, a fivefold surge in value to ₹34, 211 crore was on the back of a 34% jump in the number of fraud cases at these banks while the PSBs suffered only a 24% increase. These facts are especially germane (relevant to a subject under consideration) when one considers that the government has been on mission mode in trying to expedite consolidation among the PSBs and is ultimately looking at opening up the sector as a whole to greater private sector participation. With the RBI lamenting (express regret or disappointment about something) the ‘weak implementation of early warning signals’, non-detection of signals during internal audits and non-cooperation of borrowers during forensic audits as being among the key factors leading to delayed detection of fraud, the impending concentration of risk in fewer lenders is far from reassuring. The fallen jeweller’s case is only the symptom of a deeper malady (a disease or ailment). The RBI as industry regulator needs to walk the talk and ensure tighter oversight. Any laxity threatens overall financial stability.

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Hope you got to know some new words/phrases which will definitely be useful in the English section of upcoming competitive exams. Wishing you all the best for your preparation!

Want to improve your vocabulary further? Download the Lists of Word-Meanings of Previous Months here.