Private sector lender Kotak Mahindra Bank on August 30 said it wrote twice to Reserve Bank of India (RBI) during the current financial year requesting it to enforce standardisation in fraud reporting requirements by all banks.
“We have observed that there is significant variance in what is chosen to be reported to the regulator by other banks. We have appealed to the regulator vide our letters dated 17th March, 2022 and 30th August 2022 to enforce standardisation in reporting requirements,” the lender said in a clarification issued today to media reports.
The total number of frauds reported by Kotak Mahindra Bank to the regulator is in line with regulatory requirements and include instances of skimming, phishing, vishing, e-commerce frauds, across debit cards, credit cards, UPI, mobile banking, internet banking, payment gateways, among others, the bank said. “Regardless of whether customers and / or the bank faced losses, or whether the fraud amounts were recovered eventually," it added.
The clarification comes after a report said that Kotak Mahindra Bank recorded 5,278 cases of fraud in the first quarter (April to June) of the current financial year (2022-23), according to Reserve Bank of India (RBI) data. State Bank of India (SBI), meanwhile, reported only nine fraud cases during the same period, as per the report.
The media report cited data provided by Union Minister of State for Finance Bhagwant Karad to the Parliament on August 2.
As per the data, during the first quarter of current fiscal (Q1FY23), while some lenders declared no frauds, Kotak Mahindra Bank reported 5,278 frauds. Large banks including SBI reported 9 frauds during the first quarter of the current fiscal, while HDFC Bank reported 303 fraud cases, and ICICI Bank reported 436 cases of frauds.
Kotak Bank in its release today said for the period reported, of the 5,278 fraud instances reported by the bank to regulator, 97 percent of the complaints were associated to digital and card related frauds, that occur “due to customers unwittingly compromising their credentials by clicking on unknown links”, or giving access to their devices, among others.
“It is our submission that other banks do not appear to be exhaustively or uniformly reporting these types of frauds. Such frauds are not a reflection of any vulnerabilities in the bank’s secure infrastructure and systems,” Kotak Bank said.
As per RBI’s FY22 annual report, an assessment of bank group-wise fraud cases over the last three years indicates that while private sector banks have reported the maximum number of frauds, public sector banks contributed maximum to the fraud amount.
For instance, private lenders reported a total of 5,334 fraud cases amounting to over Rs 1 lakh during FY22, higher than 3,078 fraud cases reported by the state-led lenders. The total amount of frauds reported by private banks during the previous fiscal stood at Rs 17,588 crore while public sector banks reported frauds amounting to Rs 40,282 crore during the same period.
On an overall basis, lenders reported a total of 9,103 fraud related cases amounting to Rs 60,414 crore during FY22, lower than Rs 1.38 lakh crore of frauds reported during FY21.
Frauds have been occurring predominantly in the loan portfolio and while the number of frauds reported by private sector banks were mainly on account of small value card or internet frauds, the fraud amount reported by public sector banks was mainly in loan portfolio, the RBI annual report said.
Moneycontrol on August 29 reported that the RBI is working on a fraud registry that would help it keep repeat offenders at bay from the banking system.
"The fraud registry will capture information like IP (internet protocol) addresses and phone numbers repeatedly used to commit frauds," Executive Director Anil Kumar Sharma said on August 29.
"A mechanism for these details would be created so that banks can report these details to us. That will help us prevent these fraudsters using the banking infrastructure for perpetrating fraud after fraud after fraud," he added.