RBI report: Fewer bank frauds, bigger losses

While the number of bank frauds fell, the amount went up in 2025-26, showed the Reserve Bank of India's (RBI) report on ‘Trends and Progress of Banking in India’ 2024-25.

At the end of September, banks reported a total of 5,092 frauds, significantly lower than 18,386 frauds reported in the year-ago period. However, the value of frauds rose to ₹21,515 crore from ₹16,569 crore during April-September.

“Frauds present multiple challenges by exposing financial institutions to reputational, operational and business risks, while also weakening customer trust,” the report said.

However, the share of high-value frauds seems to be falling, with banks reporting 509 frauds of ₹1 lakh and above amounting to a total of ₹11 crore in 2025-26 so far. In comparison, they had reported 11,615 such frauds in 2024-25 worth ₹3,497 crore.

The rise in the value of frauds is a continuation of trends seen in 2024-25, when banks reported 23,879 frauds amounting to ₹34,771 crore, compared with 36,052 frauds worth ₹11,261 crore in 2023-24. The sharp rise in the amount involved was largely due to the re-examination and fresh reporting of 122 fraud cases, totalling ₹18,336 crore, in compliance with the Supreme Court’s 27 March 2023 judgment on the classification of frauds, the RBI report said.

In its March 2023 hearing of ‘State Bank of India & Ors. v. Rajesh Agarwal & Ors’, the top court upheld a borrower’s right of hearing before its accounts are classified as fraudulent by banks and financial institutions. It also awarded such borrowers the opportunity to contest a fraudulent classification, likely leading to delayed recording or recognition of the entire fraud amount by banks.

As of 30 September, banks and financial institutions withdrew 942 frauds amounting to ₹1,28,031 crore due to non-compliance with the principles of natural justice as per the Supreme Court judgment.

Card and internet frauds top the list

The RBI report showed that the share of card and internet frauds accounted for 66.8% of total fraud cases reported during 2024-25, followed by advances-related frauds at 33.1%. Private banks accounted for 59.3% of the total number of reported frauds, with card and internet-related frauds being the highest in terms of volume, and advance-related frauds in terms of value.

On the other hand, public-sector banks led in terms of the quantum of fraud, accounting for 70.7% of the amount involved. Here, the highest share of fraud was related to advances, both in terms of the number of cases and the amount involved.

“The share of advances-related frauds, both in terms of number and amount, increased across all bank groups (except for PSBs in terms of amount), primarily due to a significant portion of reclassified frauds being associated with advances,” the report said.

The central bank said it continues to work with stakeholders, including the ministry of home affairs, to develop and operationalize measures to curb digital and cyber-enabled fraud and strengthen customer protection.

This includes the introduction of the principle-based framework on authentication of digital transactions and exclusive internet domains, and designated numbering series for regulated entities to reduce cybersecurity threats.

The RBI has also developed a platform to identify mule accounts called ‘MuleHunter.ai’ to facilitate system-wide learning to identify and flag potential mule accounts, which has been implemented in 23 banks as of 17 December. It has also introduced a digital payments intelligence platform (DPIP) to leverage AI to flag risky transactions and share intelligence for fraud detection and prevention.

“REs (regulated entities) need to put in place robust internal controls, ensure sufficient grievance redress officers at all levels, and enhance digital financial literacy to address digital frauds,” the regulator said in the report.