Banks in India have taken a sharp U-Turn in their digital services. Recently, Banks launched various online digital services such as account opening. Banks marketed their products saying that customers can easily open accounts in just a few clicks. But with the advancement of digital services, the frauds have also increased. Frauds have increased so much that the government and banks are forced to rethink their strategies.
Now, Banks across India are taking a big step back from fully digital account opening. After years of promoting online onboarding, many top banks are now returning to physical checks and in-person verification to fight rising identity theft and the misuse of mule accounts, The Economic Times reported.
For a long time, banks tried to make opening an account as easy as a single online click. But a sharp rise in digital fraud and suspicious money transfers has forced them to rethink this strategy.
According to the report, major banks like ICICI Bank, HDFC Bank, State Bank of India, Bank of India and Bank of Baroda have paused or limited their instant digital onboarding services. New customers are now being asked to visit a branch for document verification or meet bank officials who come to their homes for physical checks.
This shift also follows recent RBI penalties on several banks for weak KYC (Know Your Customer) checks during digital onboarding.
ICICI Bank has fully stopped its instant online account-opening service. Now, only salary accounts are opened digitally. All other customers must complete the process through an assisted model, where a bank representative visits them and completes the verification digitally.
HDFC Bank, meanwhile, says it continues to onboard customers digitally but is strengthening its systems. The bank is moving toward an integrated “assisted digital model,” which mixes technology with human support to make the process safer and help customers choose the right products.
Even as banks tighten checks, RBI data shows a surprising contrast. Fraud cases in FY25 actually fell sharply—but the amount of money involved jumped dramatically.
The RBI’s annual report shows that India recorded 23,953 fraud cases in FY25, a drop of 34% from the previous year. However, the value of these frauds soared to ₹36,014 crore—almost three times more than last year. These numbers include only cases of ₹1 lakh and above.
Private banks reported the most fraud cases—14,233 in total, about 60% of all incidents. But public-sector banks suffered the biggest financial hit, losing ₹25,667 crore, which is over 71% of all fraud-related losses.
Digital payments—such as card and online transactions—saw the highest number of fraud cases: 13,516 in FY25. These accounted for more than half of all incidents, though the amount involved was relatively smaller at ₹520 crore.
The biggest losses happened in loans and advances. This segment saw 7,950 fraud cases but made up more than 92% of the total amount—₹33,148 crore.
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