Bank fraud cases rise 27% YoY in 2024; scams worth ₹21,367 crore logged in H1FY25: RBI data

Banking fraud cases in India surged 27 per cent to 18,461 cases in the first half of the financial year 2024-25, compared to its previous level of 14,480 cases in the same period in the previous year, reported the news agency PTI, citing official Reserve Bank of India (RBI) data.

The data also showed that the total amount involved increased nearly eightfold to ₹21,367 crore in the first half of the financial year 2024-25, compared to ₹2,623 crore in the same period last year, as per the agency report. 

The cental bank's report on Trend and Progress of Banking in India 2023-24 stated that these frauds present multiple challenges to the reputational risk, operational risk, business risk and erosion of customer confidence in the financial system of the country, as per the news report.

The report highlighted the performance till the quarter-ended September 2024 this fiscal.

However, looking at the financial year 2023-24, the RBI said that the amounts involved in the frauds were the lowest in a decade, while the average was the lowest in 16 years, as per the report. 

The percentage of frauds over interest and card frauds in total was 44.7 per cent in terms of amount and 85.3 per cent in terms of cases. The central bank's charges of penalties over regulated entities also increased during the financial year 2023-24 across all bank groups except foreign banks and small finance banks.

The total penalty amount more than doubled in 2023-24 to ₹86.1 crore, led by public and private sector banks, as per the agency report.

As reports on entities not legally associated with digital lenders rise, the central bank is trying to verify the claims with a Digital Lending App's (DLA) association with an RE. The Reserve Bank of India is in the process of creating a public repository of DLAs deployed by REs. 

This repository will contain data submitted by REs and without any intervention from the Reserve Bank of India the RE will be required to update the data for addition or removal of entities. 

“This exposes banks not only to serious financial and operational risks, but also to reputational risks. Banks, therefore, need to strengthen their customer onboarding and transaction monitoring systems to monitor unscrupulous activities,” said RBI cited the news agency. .

This requires coordination with law enforcement agencies so the issues are detected and resolved in time. RBI also added that it is working towards strengthening transaction monitoring systems to ensure the best practices are maintained and to prevent digital fraud.