Home >Industry >Banking >Frauds in Indian banks have increased: Deloitte survey
Banking fraud-related incidents increased at least 10% in the last two years, the India Banking Fraud Survey said. Photo: AFP
Banking fraud-related incidents increased at least 10% in the last two years, the India Banking Fraud Survey said. Photo: AFP

Frauds in Indian banks have increased: Deloitte survey

Most of the incidents were linked to retail banking, including frauds linked to Internet banking, automated teller machines (ATMs) and debit and credit cards

Mumbai: Incidents related to fraud are increasing in Indian banks, a survey has found.

Audit and consultancy company Deloitte Touche Tohmatsu Ltd surveyed 44 banks in the second edition of its India Banking Fraud Survey, in which more than 50% of the respondents said fraud-related incidents increased at least 10% in the last two years.

Most of the incidents were linked to retail banking, including frauds linked to Internet banking, automated teller machines (ATMs) and debit and credit cards, apart from identity frauds.

The banks surveyed pointed to an average loss of 10 lakh per fraud in retail banking, while a similar incidence in the corporate banking side led to a loss of 2 crore.

In corporate banking, most of the frauds are linked to diversion of funds and siphoning off of money, while identity thefts and fraudulent documentation were mainly the routes for frauds in private banking.

“Majority of the respondents indicated that less than 25% of the reported fraud loss value is recovered," Deloitte said.

Frauds in Indian banks are discovered mostly through customer complaints, internal whistleblowers, during the reconciliation of accounts or through automated data analysis or transaction monitoring software, Deloitte said.

K.V. Karthik, senior director, financial advisory services at Deloitte said banks have to pull up their socks in monitoring loans both before giving them and during their usage.

“In retail loans, it is important to prevent frauds when taking the customer on board not after you give the loan because it is very difficult to check where the funds are used. In corporate banking, because the relationships are much more long term and are renewed frequently, end use monitoring is important," Karthik said.

He added that public sector banks are increasingly becoming sensitive to increasing investments to ensure fraud prevention.

“The mentality of public sector banks is changing. Private banks are anyway on par with the foreign banks," Karthik said.

The survey was conducted between August and September 2014. The majority of banks surveyed had an asset size above 5,000 crore.

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