As technology adoption has surged over the past decade, so has the number of banking fraud cases in India. This is evident in the latest annual report released by the Reserve Bank of India (RBI). In fiscal 2024, the Indian banking sector witnessed an astonishing 166% YoY increase in fraud cases, totalling 36,075 instances. However, the total amount involved in the frauds declined a notable 46.7% YoY, amounting to ₹13,930 crore.
A closer examination of fraud cases across bank groups over the past three years reveals intriguing insights.
While private sector banks reported the highest number of fraudulent activities in FY24, public sector banks contributed the most to the overall fraud amount, albeit declined.
Private sector banks accounted for a significant 67.1% of all reported frauds in India during FY24, totalling 24,210 cases. On the other hand, public sector banks reported 75.4% of the total fraud amount, amounting to ₹10,507 crore during the last fiscal year.
Key Highlights: Bank-Wise Breakdown
- Public Sector Banks encountered 7,472 fraud cases in FY24, amounting to ₹10,507 crores. Although the volume increased significantly by 120.3% YoY, the total value of frauds reported declined by 44% YoY.
- India’s Private Sector Banks reported a whopping 169.6% YoY increase in the number of fraudulent cases, reaching 24,210 in FY24. Despite this significant increase in volume, the value of these frauds plummeted by 48.5% YoY, amounting to ₹3,170 crore.
- Foreign Banks recorded a total of 2,899 fraud cases in FY24, with fraudsters absconding with ₹154 crore. However, the positive aspect is that despite a 260.6% YoY increase in fraud volume, there was a 47.3% YoY decline in the overall value.
- Indian Payments Banks witnessed a massive increase in both volume (594.1% YoY) and value (400% YoY) of fraudulent cases during fiscal 2024. These new-age digital banks reported a total of 472 fraud cases, with fraudsters making away with ₹35 crores.
Digital Payments Fueling Frauds in Indian Banks
The RBI report also highlights the distribution of fraud cases across different areas of operation. Digital payments (card/internet) accounted for the majority, representing 80.6% of all frauds in FY24 in terms of volume. However, in terms of value, frauds reported in the loan portfolio (advances category) accounted for 84.5% of all frauds in FY24.
The number of frauds related to card and internet payments surged 334.1% YoY to 29,082 instances, with the value of frauds increasing by 426% YoY to ₹1,457 crore. On the other hand, the value of frauds in the advances category declined significantly by 52.3% YoY to ₹11,772 crore in FY24, with only a 1.1% YoY increase in the number of these types of frauds, totalling 4,133.
It’s noteworthy that while small-value card/internet frauds contributed the most to the number of frauds reported by private-sector banks, frauds in public-sector banks were primarily concentrated in the loan portfolio.
Combatting Fraud in the Digital Age
The notable triple-digit surge in fraud cases across public, private, and foreign banks indicates a heightened susceptibility to frequent fraudulent activities within the Indian banking sector. Despite this trend, these banks have managed to prevent large-scale financial losses. These banks are keeping a close eye on high-value transactions, making it difficult for fraudsters to dupe customers. That’s why these fraudsters are focusing more on small-ticket transactions to dupe customers.
However, Small Finance and Payments banks (e.g., Airtel Paytments Bank, Jio Payments Bank) must enhance their fraud detection capabilities to diminish the volume and value of fraudulent activities.
As India embraces the digital revolution, the battle against fraud assumes greater significance in safeguarding the integrity and stability of the financial system. The findings of the RBI report serve as a wake-up call for banks, regulators, and policymakers to redouble their efforts in combating fraudulent activities.
