Private Banks reported maximum frauds: RBI

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According to the Reserve Bank of India’s (RBI) annual report, if private sector banks experienced the highest number of fraud cases in the fiscal year 2022-23, public sector banks bore the greatest impact in terms of the amount involved in the frauds. The report stated, “An analysis of bank group-wise fraud cases over the past three years reveals that while private sector banks reported the highest number of frauds, public sector banks continued to contribute the most to the total fraud amount in 2022-23.”

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The largest number of frauds were reported in the digital payments category (card/internet), but when considering the value of the frauds, they were primarily observed in the loan portfolio. The report also indicated a 55 percent decrease in the amount involved in total reported frauds in 2021-22 compared to 2020-21.

Furthermore, the report highlighted a proportional decline in the total amount involved in frauds during 2022-23, with a reduction of 49 percent compared to 2021-22.

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“While private sector banks reported the highest number of frauds in the small-value card/internet category, frauds in public sector banks were primarily related to the loan portfolio,” the report stated. The central bank advised banks to exercise due diligence in their processes.

“To enhance the reliability of data in Fraud Monitoring Returns (FMR) submitted by banks, they were instructed to conduct thorough due diligence and establish the involvement (with credible proof/evidence) before including/adding the name(s) of non-whole time Director(s) in the Fraud Monitoring Returns/Central Repository of Information on Large Credits (FMR/CRILC) when reporting fraud/non-cooperative borrowers,” the report explained.

Earlier, RBI Executive Director Ajay Kumar Choudhary expressed concerns about online banking frauds. He stated, “RBI has taken multiple initiatives to educate people about online frauds. The data privacy law will further assist in combating fraudulent online messages.” Choudhary made these comments during a conversation at Moneycontrol’s inaugural India Fintech Conclave (IFC) on March 7.

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These remarks are significant in light of the increasing number of banking frauds and text-message-based phishing attacks.

Consequently, several banks have alerted customers to avoid engaging with fake social media accounts pretending to represent them. Official handles of HDFC Bank, ICICI Bank, and Kotak Mahindra Bank have cautioned customers against sharing personal information with these fake accounts.

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