Many Banks in India Lost an Unexpected ₹5.3 Lakh Crores to Frauds in Last 10 Years!

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Many Banks in India Lost an Unexpected ₹5.3 Lakh Crores to Frauds in Last 10 Years!

Indian banks have detected an astonishing amount ₹5.3 lakh crores in fraud over a decade.  In addition, most bank fraud cases took place in Maharashtra in which the RBI takes action.

New Delhi:  An alarming increase in fraudulent activities has been observed in Indian banks over the past decade (2013-14 to 2022-23); the Reserve Bank of India (RBI) data acquired by means of a Right To Information (RTI) application filed by an organization reveals an unbelievable Rs 5.3 lakh crore in reported frauds.

The data indicates a concerning pattern, as public and private sector institutions reported a combined sum of 4,62,733 instances of fraudulent activities throughout the specified time frame. The state that received the most reported instances of fraudulent activities was Maharashtra, followed by Haryana, Delhi, Tamil Nadu, and Uttar Pradesh. In addition to Karnataka, Gujarat, Telangana, West Bengal, and Rajasthan, the number of bank forgeries committed in these states increased substantially over the last decade, from 8,000 to 12,000.

This increase in fraud is attributed by experts to the expanding use of digital financial services.  An increase in fraud complaints has resulted from customers placing a greater emphasis on bank applications to access a variety of services, as a consequence of the substantial surge in digital banking usage.

An examination of the annual reports of the Reserve Bank of India reveals that the majority of these fraudulent activities pertain to card transactions, digital banking, and Internet banking. For instance, banks reported the highest number of card and internet banking frauds (6,659 out of 13,530) during the fiscal year 2022-23 (FY23). Additionally, frauds associated with advances were significant at 4,109 in FY23. In recent years, there has been a consistent upward trajectory in the occurrence of digital banking forgeries.

Description Number
Total amount of bank frauds (2013-14 to 2022-23) ₹5.3 lakh crore
Total number of fraud cases reported 4,62,733
Fraud cases through cards and internet banking (FY23) 6,659
Frauds against advances (FY23) 4,109
Total fraud cases reported (FY23) 13,530
Frauds against advances (FY22) 3,833
Fraud cases through cards and internet (FY22) 3,596
Total fraud cases reported (FY22) 9,097
Frauds against advances (FY21) 3,476
Fraud cases through cards and internet (FY21) 2,545
Total fraud cases reported (FY21) 7,338

 

Actively warning the public about falling victim to fraud disguised as KYC (Know Your Customer) updates, the RBI has issued this advisory. In most cases, these scams involve unsolicited phone calls, text messages, or emails that deceive victims into divulging sensitive data.

In an ongoing effort to thwart this escalating menace, financial institutions are diligently fortifying their digital security infrastructure. This includes making investments in emerging technologies such as Machine Learning (ML) and Artificial Intelligence (AI) in order to improve services and reduce instances of fraud. Moreover, it is anticipated that the enforcement of the data privacy laws will further ensnare perpetrators of online fraud.

Certain experts acknowledge the escalation of fraudulent activities but underscore the growing emphasis that institutions place on credit risk assessment. Despite the increase in fraudulent activities, financial institutions are proactively endeavoring to fortify their credit risk assessment procedures.

Banks and the Reserve Bank of India are employing multifaceted strategies to tackle this critical matter. A greater emphasis on risk management, public education regarding online forgeries, and financial investments in sophisticated security measures are crucial in reducing the prevalence of these financial crimes.

About The Author:

Yogesh Naager is a content marketer who specializes in the cybersecurity and B2B space.  Besides writing for the News4Hackers blog, he’s also written for brands including CollegeDunia, Utsav Fashion, and NASSCOM.  Naager entered the field of content in an unusual way.  He began his career as an insurance sales executive, where he developed an interest in simplifying difficult concepts.  He also combines this interest with a love of narrative, which makes him a good writer in the cybersecurity field.  In the bottom line, he frequently writes for Craw Security.

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