Banking Sector Faces Surge in Fraud Cases, But Losses Plunge – RBI Report Reveals Startling Trends

 

The latest Annual Report from the Reserve Bank of India (RBI) for the year 2022-23 has revealed a worrisome increase in the number of fraud cases, with a total of 13,530 cases reported compared to the previous year. However, there is a significant silver lining as the amount of money involved in these frauds has nearly halved, totaling Rs 30,252 crore.

The report highlights that frauds in the digital payments category are prevalent in terms of sheer numbers, while frauds related to loans hold the lead in terms of the value of the amounts involved. Over the past three years, private sector banks have reported the highest number of fraud cases. However, it is public sector banks that have contributed the most significant amount to the overall fraud figures in the year 2022-23. The data analyzed fraud cases involving Rs 1 lakh and above that were reported over a three-year period.

Also Read: Cybercrime in Nagpur – Cyber Blackmailer Couple Arrested in Pune for Extorting Money

Comparing the data from the previous two years, the report indicates a substantial decline in the amount involved in reported frauds. The total amount of money involved in frauds during 2021-22 witnessed a 55% reduction compared to the previous year, and this downward trend continued in 2022-23, with a 49% decrease from 2021-22.

When examining the specific categories of fraud, private sector banks have reported a higher number of frauds in the small value card/internet category, while public sector banks have encountered frauds primarily in their loan portfolios. It is worth noting that the reported frauds in a particular year might have transpired several years earlier before being detected.

Analyzing the vintage of reported frauds during 2021-22 and 2022-23, the report identifies a significant time-lag between the occurrence and detection of fraud. In terms of value, a staggering 93.7% of the frauds reported in 2021-22 originated from previous financial years. Similarly, 94.5% of the frauds reported in 2022-23 by value were carryovers from earlier financial years.

During the fiscal year 2022-23, public sector banks reported 3,405 frauds involving Rs 21,125 crore, while private banks reported 8,932 cases involving Rs 8,727 crore. The remaining cases were attributed to foreign banks, financial institutions, small finance banks, and payment banks. Notably, a significant portion of the total amount involved, approximately 95% or Rs 28,792 crore, was associated with frauds related to loans and advances. However, it is important to note that the reported amounts do not necessarily reflect the actual losses incurred, as recoveries can mitigate the losses. Additionally, the entire amount involved is not necessarily misappropriated.

The RBI acknowledges the need for stronger measures to combat fraud in the banking sector. The central bank assures that additional steps will be taken to ensure the integrity and security of the financial system.

In response to the increasing banking fraud and the losses incurred due to cybercrime, researchers from Future Crime (FCRF) suggest multiple compliance and best practices. These include strengthening banking security by investing in robust cybersecurity systems and technologies to protect customer data and financial transactions. This encompasses implementing measures such as multi-factor authentication, encryption, intrusion detection systems, and regular security audits.

Also Read: Cyber blackmailing case: Shatrughan's bail plea rejected

Furthermore, FCRF researchers highlight the importance of enhancing customer awareness through campaigns, implementing real-time monitoring, fostering collaboration and information sharing with industry peers, law enforcement agencies, and cybersecurity experts, as well as prompt incident response to mitigate such frauds and losses.

To summarize, the RBI's Annual Report for 2022-23 reveals a rise in fraud cases in the banking sector, with a significant reduction in the amount involved.


Here are the key points from the information provided:

  1. The number of frauds in the banking sector increased to 13,530 in the year 2022-23, but the amount of money involved nearly halved to Rs 30,252 crore.

  2. Digital payment frauds were dominant in terms of sheer numbers, while frauds related to loan portfolios had a higher value associated with them.

  3. Private sector banks reported the highest number of frauds, while public sector banks contributed the most to the total amount of fraud in 2022-23.

  4. There was a significant 55% decline in the amount of money involved in reported frauds during the year 2021-22 compared to the previous year.

  5. Public sector banks reported 3,405 frauds involving Rs 21,125 crore in the year 2022-23, whereas private banks reported 8,932 cases involving Rs 8,727 crore.

  6. Approximately 95% of the total amount involved in frauds was associated with cases related to loans and advances.

  7. The Reserve Bank of India (RBI) has pledged to take further steps to address fraud in the banking sector.

Source: https://www.the420.in/banking-sector-faces-surge-in-fraud-cases-but-losses-plunge-rbi-report-reveals-startling-trends/


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