RBI annual report: Most frauds hit private lenders but PSU banks outweigh in fraud amount

Private sector banks report maximum frauds, PSBs lead in the amount of frauds

If private sector banks suffered most number of frauds in the fiscal year 2022-23, then their public sector peers had to bear the biggest brunt of it in terms of the fraud amount, the Reserve Bank of India's (RBI) annual report showed.

"An assessment of bank group-wise fraud cases over the last three years indicates that while private sector banks reported the maximum number of
frauds, public sector banks continued to contribute maximum to the fraud amount during 2022-23," the report said.

The maximum number of frauds were reported in the category of digital payments (card/internet). However, in terms of value, frauds have been reported primarily in the loan portfolio.

Also read: Major banks warn customers against engaging with fake social media handles

The report also showed that there was a 55 percent decline in the amount involved in the total frauds reported during 2021-22 over 2020-21.

Further, the report highlighted that proportionately, the decline in the total amount involved in frauds continued during 2022-23, with a reduction of 49 per cent over 2021-22.

"While small value card/internet frauds contributed maximum to the number of frauds reported by the private sector banks, the frauds in public sector banks were mainly in loan portfolio," the report said.

Due diligence 

The apex bank had advised banks to carry due diligence of the processes involved.

"In order to improve data reliability in Fraud Monitoring Returns (FMR) submitted by banks, they were advised to carry out proper due diligence and ascertain the involvement (with credible proof/ evidence) before including/
adding name(s) of the non-whole time Director(s) in the Fraud Monitoring Returns /Central Repository of Information on Large Credits (FMR/CRILC) while reporting fraud /non-cooperative borrower," the report said.

Earlier, RBI executive director Ajay Kumar Choudhary raised concerns on online banking frauds.

Also read: RBI ED Ajay Kumar Choudhary raises concerns over banking frauds

"Multiple initiatives have been taken via RBI to educate people regarding online frauds. Data privacy law will help further to tackle online fake messages frauds," RBI Executive Director Ajay Kumar Choudhary said at conversation at Moneycontrol's inaugural India Fintech Conclave (IFC) on March 7.

The comments are significant in the backdrop of rising number of banking frauds and text-message based phishing attacks.

In line with this, several banks have alerted customers to not engage with fake social media handles purporting to represent them. The official handles of HDFC Bank, ICICI Bank, and Kotak Mahindra Bank warned customers to not share their personal details with the fake handles.