Eight Times Jump In Banking Frauds : RBI Report

Bank fraud cases surged significantly in the first half of the current fiscal, with 18,461 incidents reported, involving  Rs 21,367 crore—an eight-fold jump compared to  Rs 2,623 crore across 14,480 cases in the same period last year, according to the Reserve Bank of India's (RBI) data.

Insights from RBI’s Banking Report
The Report on Trend and Progress of Banking in India 2023-24 highlights the performance of banks and financial institutions during 2023-24 and part of 2024-25. It revealed that frauds are posing multiple risks, including reputational, operational, and business risks, which undermine customer confidence and financial stability.

Internet and Card Fraud on the Rise

For 2023-24, internet and card frauds accounted for 44.7 per cent of the total amount involved and 85.3 per cent of all fraud cases. Private sector banks reported the most cases (67.1 per cent), while public sector banks accounted for the largest amount involved.

Penalties on Banks Increase

Regulatory penalties on banks doubled in 2023-24, reaching  Rs 86.1 crore, driven by public and private sector banks. However, penalties on co-operative banks declined during the year.

Tackling Digital Fraud

The RBI noted the rising prevalence of digital fraud, with many cases stemming from social engineering attacks and the misuse of mule bank accounts. To address this, the RBI is:

• Develop a public repository of Digital Lending Apps (DLAs) to verify their legitimacy.
   
• Collaborating with banks and law enforcement agencies (LEAs) to strengthen transaction monitoring and curb frauds.
   
• Urging banks to enhance customer onboarding and transaction systems to mitigate risks.

"Social engineering attacks and mule accounts expose banks to financial, operational, and reputational risks. Strengthening systems and coordination with LEAs is crucial," the RBI emphasized.

The report underscores the need for banks to adopt robust practices to safeguard customers and the financial system against evolving fraud risks.