Indian banks report Rs 5.3L cr in frauds between 2013-14 and 2022-23: Report

Mumbai/ New Delhi: Indian banks have disclosed frauds amounting to Rs 5.3 lakh crore over the past decade, according to Reserve Bank of India (RBI) data obtained by Moneycontrol through a right to information (RTI) petition. The data reveals that both private and public sector banks reported a total of 4,62,733 frauds between 2013-14 and 2022-23.

In response to Moneycontrol’s inquiries regarding the specifics of bank frauds over the past ten financial years categorised by state and Union territory, the RTI response indicated that Maharashtra recorded the highest number of frauds, followed by Delhi, Haryana, Tamil Nadu, and Uttar Pradesh. Karnataka, Gujarat, Telangana, West Bengal, and Rajasthan followed closely, with total bank frauds ranging between 8,000 to 12,000 over the past decade.

Sanjay Agarwal, Senior Director of Banking, Financial Services, and Insurance at CareRatings, noted a surge in fraud cases but emphasised that banks are prioritising credit risk assessment. “Frauds have been on the rise, but banks are concentrating on evaluating credit risks,” Agarwal remarked.

Analysis of recent annual reports from the central bank suggests that the majority of frauds are related to advances, as well as through cards and digital or internet banking channels. For instance, in FY23, banks reported the highest number of frauds through cards and internet banking, out of a total of 13,530 cases.

Additionally, the RBI cautioned the public on February 2 against fraudulent activities masquerading as updates to know your customer (KYC) norms.

Experts attribute the increase in bank frauds in recent years to the growing adoption of digital banking and payment services. Chandan Sinha, former executive director of RBI, highlighted the surge in customer complaints and frauds due to the increased use of banks’ internet applications for various services.

Concurrently, banks are striving to enhance their digital capabilities by investing in technologies such as artificial intelligence (AI) and machine learning (ML) to improve services and mitigate fraud risks.

RBI executive director Ajay Kumar Choudhary underscored the central bank’s efforts to educate the public about online frauds during a discussion at Moneycontrol’s India Fintech Conclave (IFC) in March 2023.

Agarwal emphasised that banks and their boards are intensifying their focus and investments in risk management and assessment. “We’ve observed banks, including the central bank, placing greater emphasis on risk assessment,” he added.