Earlier this month, IDFC First Bank reported it had been the victim of a fraud in which four of its current and former employees connived to siphon off ₹590 crore from the bank account of a Haryana government department. The theft was uncovered when the department tried to close its account with the bank and found a discrepancy between the account balance in its records and the actual balance.
While the Haryana government subsequently said it had recovered all its money, the incident underscores the risks of banking fraud, especially as the number of digital transactions increase, enabling new methods of fraud.
Shifting data
Indian banks reported 11,615 cases of fraud involving ₹3,497 crore in 2024-25. Both figures were lower in 2023-24. The biggest category was loans (33% of the total amount involved), followed by deposits (about 10%). In terms of number of cases, card and internet fraud accounted for two-thirds.
However, data on fraud reporting needs to be interpreted carefully because banks can classify a case as fraud and subsequently change that classification. This has happened to a considerable extent in recent years, mainly because of a 2023 Supreme Court judgement on an earlier RBI order on how to classify cases as fraud. As a result, banks were forced to re-examine cases.
Thus, for instance, the total value of reported frauds tripled in 2024-25 over the previous year, when measured by the reporting date rather than when the crimes actually occurred. A large chunk of the increase related to cases that had occurred in previous years.
No risk to banking system
At the sector level, frauds do not pose a threat to the banking system. As of 2024-25, the total value of frauds reported by banks was ₹34,771 crore. This amounted to about 0.14% of the ₹241 trillion in deposits held by banks as of 31 March 2025. Seen another way, the value of reported fraud was about 5% of the total operating profit of all banks in 2024-25.
Public sector banks, which held about 55% of the banking system's total assets as of 31 March 2025, accounted for about 71% of the amount involved in frauds. This data is based on the date of reporting, and thus could also include cases from previous years.
According to the RBI, while the share of card or internet fraud declined across all bank groups in 2024-25, the share of loan-related fraud increased for all categories of banks except public sector banks. Again, this was primarily due to the reclassification exercise that banks were required to do.
Public sector banks dominate fraud volumes
The list of the 10 banks with the largest sums involves in cases of fraud in 2024-25 is heavily skewed toward the public sector. State Bank of India leads this list, which has only three private banks. One of these, IDBI Bank, slots in at second; while it is officially classified as a private bank, its largest shareholder is government-owned Life Insurance Corporation. The other two private banks on the list are Axis Bank and HDFC Bank.
Interestingly, for both HDFC Bank and Axis Bank, the number of cases of fraud is high (next only to SBI) but the total amount involved is low. This implies that the average size of fraud is lower than the sector average—on a simple average basis, about ₹17 lakh for HDFC Bank versus about ₹1.9 crore for SBI. While bank-wise data on type of fraud is not available, the RBI has said that the two categories of cards and internet account for the highest number of fraud cases reported by private banks.
UPI uptick
In terms of the amount involved in bank frauds, loans lead all categories. What should concern banking customers is that cases of fraud in cards, internet banking and increasingly UPI payments are the most common. The number of cases of UPI fraud tripled between 2021-22 and 2023-24, while the amount involved rose about 4.5 times. Although 2024-25 did see a year-on-year decline, the numbers remain significant in the context of frauds.
However, in the context of total UPI transactions, the number of cases of fraud and the amount involved are minuscule. In the eight months to November 2025, there were about a million UPI fraud cases involving around ₹805 crore. This amounts to 0.00068% of total UPI transactions by volume and 0.0039% by value over this period. Incidentally, it's not clear if UPI fraud forms part of the overall fraud data reported by the RBI as occurring within banks.
Low recoveries
When a customer disputes a UPI transaction, the bank raises a so-called ‘chargeback’—essentially a formal dispute raised to recover funds from unauthorized or fraudulent transactions. In December 2025, the government reported to Parliament that 22% of fraud chargebacks raised between April and September 2025 were acted on within 7 days and 92% within 30 days. However, actual recoveries — the metric that actually matters to customers — were negligible, with just 6% of the total amount involved in fraud chargebacks being returned.
Nine banks accounted for about 57% of chargebacks raised during April-September 2025. Two banks, Yes Bank and Axis Bank, accounted for about a quarter of the total chargebacks raised—15% and 12%, respectively. UPI volumes flowing through them was also a factor. According to data from the National Payments Corporation of India, Yes Bank accounted for about 40.5% of UPI transactions and Axis Bank 9% in January 2026. While there’s no systemic risk, individual risk remains.
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