In the last ten years, Indian banks have reported fraud cases amounting to an astonishing Rs. 5.3 lakh crore, according to data from the Reserve Bank of India (RBI). This information was disclosed in response to a right to information (RTI) petition filed by Moneycontrol. Between the financial years 2013-14 and 2022-23, a total of 462,733 frauds were reported by both private and public sector banks.
The RTI response also revealed that Maharashtra had the highest number of reported bank frauds, followed by Delhi, Haryana, Tamil Nadu, and Uttar Pradesh. Other states such as Karnataka, Gujarat, Telangana, West Bengal, and Rajasthan reported between 8,000 to 12,000 bank frauds over the past decade. This data provides a detailed analysis of bank fraud prevalence across different states in India.
Sanjay Agarwal, Senior Director of banking, financial services, and insurance at CareRatings, highlighted that the increase in bank frauds is a result of inadequate due diligence in the assessment process. He pointed out that banks often overlook irregularities at various levels, which has led to a rise in both the number and amount of frauds over time.
A review of the RBI’s recent annual report indicated that most frauds were related to advances, cards, and digital or internet banking. For example, in FY23, out of 13,530 cases reported, 6,659 were through cards and internet banking, while 4,109 were related to advances. This data emphasizes the areas of banking that are most vulnerable to fraudulent activity.
The RBI has issued warnings to the public about frauds disguised as updates to know your customer (KYC) norms. According to the central bank’s alert issued on February 2, customers often receive unsolicited communications that manipulate them into revealing personal information. This warning underscores the importance of safeguarding personal data from potential fraudsters.
Industry experts have observed an increase in bank frauds due to the growing use of digital banking and payment services. Chandan Sinha, former executive director at RBI, stated that the significant rise in the usage of digital banking services has resulted in a surge in complaints and fraud cases. This trend highlights the risks associated with the increasing reliance on digital platforms for banking transactions.
In an effort to combat the rising number of frauds, banks are adopting new technologies such as artificial intelligence (AI) and machine learning (ML) to enhance services and minimize instances of fraud. For example, the State Bank of India has established institutional centers for AI product development, while Bank of Baroda has integrated technology at its branches to provide account details and other services. This shift toward utilizing technology signifies banks’ commitment to fighting banking fraud.
