Research & Opinion
Bank Frauds Surge: RBI Reports Rs 21,367 Crore Loss in Just 6 Months
The Reserve Bank of India’s (RBI) latest report reveals an alarming surge in bank fraud cases during the first half of the current fiscal year. From April to September 2023, 18,461 fraud cases were reported, involving a staggering Rs 21,367 crore. This represents a significant rise from the same period last year, which saw 14,480 cases involving Rs 2,623 crore.
The data shows a 28% increase in the number of fraud cases and an eight-fold jump in the total financial impact. The findings are part of the Report on Trend and Progress of Banking in India 2023-24, which evaluates the performance of banks, including commercial and co-operative banks, as well as non-banking financial companies (NBFCs).
Digital Frauds Dominate
Digital frauds, including internet and card-related scams, accounted for 44.7% of the total amount defrauded and a staggering 85.3% of all cases reported during the period. This underscores the growing vulnerability of digital banking platforms.
Private sector banks reported the majority of fraud cases, contributing to 67.1% of the total. However, public sector banks suffered the highest financial losses, especially in card and internet fraud categories.
Rising Regulatory Penalties
In response to the growing fraud risk, the RBI has increased regulatory penalties on banks. The total penalties imposed during 2023-24 more than doubled, reaching Rs 86.1 crore. Public and private sector banks bore the brunt of these penalties, while co-operative banks experienced a decline.
Tackling Digital Lending Frauds
The RBI highlighted concerns over fraudulent digital lending schemes falsely claiming links to regulated entities. To address this, the central bank is developing a public repository of verified digital lending apps, allowing customers to authenticate legitimate services.
Additionally, the report points to the increasing use of mule accounts in perpetrating digital fraud. Social engineering attacks targeting customers remain a significant challenge, compounding the risk to banks.
Strengthening Fraud Prevention Measures
The RBI urged banks to enhance customer onboarding and transaction monitoring systems to detect fraudulent activities. It also emphasized the importance of collaborating with law enforcement agencies (LEAs) to address systemic-level issues effectively.
“This exposes banks to serious financial, operational, and reputational risks. Strengthened transaction monitoring and coordination with LEAs are critical to curbing these threats,” the RBI noted.
The central bank is working closely with banks and LEAs to share best practices, control the proliferation of mule accounts, and prevent digital frauds from escalating further.