There has been a significant surge in bank fraud cases during the first half of this fiscal (April-September), with 18,461 cases amounting to Rs 21,367 crore, according to a report by the Reserve Bank of India.
The figures are an almost 28 per cent rise in the number of cases (14,480 in April-September of FY24) and over eight-fold increase in the total amount (Rs 2,623 crore) compared to the same period last fiscal.
In FY 2023-24, the internet and card frauds accounted for 44.7 per cent of the total fraud amount and 85.3 per cent of the cases, stated the Central Bank in its report on the trend and progress of banking in India.
Private sector banks reported 67.1 per cent of all fraud cases, the public sector banks faced the highest financial impact as stated by the report.
In terms of number of frauds, the share of card and internet frauds was highest for all bank groups in 2023-24," it said.
On the enforcement front, total penalties imposed on banks in 2023-24 stood at Rs 86.1 crore.
Total instance penalty imposed on REs surged all bank groups except FB and small financial banks (SFB) in 2023-24. The sum of total penalty amount for the same period more than double its average of earlier years, wherein public sector and private banks led to the increase, while penalties imposed on Co-operative bank declined during this year along with an increasing rate in case of imposing penalty instances the central bank pointed out in a report.
Frauds pose numerous risks for the financial system in terms of reputational risk, operational risk, business risk, and loss of customers' confidence along with financial stability implications.
"Looking ahead, there is an ongoing necessity for banks to improve their standards of risk management, IT governance structures, and systems of customer onboarding and transaction monitoring to prevent fraudulent practices, such as suspicious and suspicious transactions," said RBI.
The central bank is working on a public repository of digital lending apps to help customers verify the legitimacy of such services.
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