According to data provided by RBI in response to Moneycontrol’s RTI request, Maharashtra recorded the greatest number of scams, followed by Uttar Pradesh, Delhi, Haryana, Tamil Nadu, and Haryana.
According to Reserve Bank of India (RBI) data made accessible in response to a right to information (RTI) case filed by Moneycontrol, Indian banks recorded frauds of Rs 5.3 lakh crore during the previous ten years. According to the data, between 2013–14 and 2022–2023 banks—private and public—reported a total of 4,62,733 frauds.
In response to Moneycontrol’s queries on the details of bank frauds in the last 10 financial years by state and Union territory, the RTI reply showed that Maharashtra reported the highest number of frauds, followed by Delhi, Haryana, Tamil Nadu and Uttar Pradesh. Karnataka, Gujarat, Telangana, West Bengal and Rajasthan were next with total bank frauds between 8,000 to 12,000 in the last 10 financial years.
Sanjay Agarwal, senior director, of banking, financial services and insurance, CareRatings, said banks have seen a rise in frauds but banks are focusing on credit risk assessment. “Frauds have been rising but banks are focusing on credit risk assessment,” Agarwal said.
Worrying rise
A review of a few of the central bank’s most recent annual reports revealed that the majority of frauds involved advances, card purchases, and online or digital banking.
For instance, banks reported the highest number of card and online banking thefts in FY23. Debit and credit cards are examples of cards. Sixty-six percent of the 13,530 incidents that were recorded in FY23 involved cards and online banking. There were also a lot of frauds against advances (4,109). In FY22, which was the previous year, there were 9,097 overall fraud cases; 3,833 of those cases involved advances, and 3,596 involved cards and the internet. Additionally, out of a total of 7,338 frauds in FY21, 3,476 were committed against advances, and 2,545 were committed using cards and the internet.
In addition, the RBI issued a warning to the public on February 2 against frauds that masquerade as updating know your customer (KYC) procedures due to persistent reports of consumers falling victim to such incidents. According to the RBI, the typical tactic used in these situations involves sending unsolicited messages, such as emails, SMS, or phone calls, to victims, tricking them into disclosing personal information.
According to experts, bank frauds have increased in the past few years as a result of an increase in the use of digital banking and payment services.
“Digital banking services are now much more widely used. Customers are now using bank applications on the internet for a variety of financial services, which has increased the number of complaints and frauds, according to Chandan Sinha, a former executive director of the RBI.
In order to improve services and lower fraud rates, banks are simultaneously investing in new technologies such as machine learning (ML), artificial intelligence (AI), and others to improve their digital offerings. State Bank of India, for instance, has established institutional centers to create AI products. In order to provide account information and other services, the Bank of Baroda has installed technology in its branches. Numerous financial institutions have implemented chatbots on their websites and mobile applications, mostly for the purpose of basic customer support and communication. The iPal chatbot from ICICI Bank directs website users to available services. The Eva chatbot from HDFC Bank helps users of their website with issues and other services.
During a talk at Moneycontrol’s first-ever India Fintech Conclave (IFC) on March 7, 2023, RBI executive director Ajay Kumar Choudhary stated that the central bank had made several steps to inform people about internet frauds. “The data privacy law will help further tackle online fake messages frauds,” said Choudhary.
Agarwal also brought attention to the fact that banks and their boards are using and allocating more funds for risk assessment and management. “We’ve seen banks and even the central bank highlighting and focusing more on risk assessment,” he stated.
