The Reserve Bank of India’s (RBI) latest annual report unveils a concerning increase in bank frauds during the financial year 2023-24, despite a significant decrease in the total monetary value involved. This report presents a detailed analysis of the types of frauds, the banks most affected, and the apparent time-lag in detecting these frauds.
Increased Incidence of Frauds
The RBI report highlights a sharp rise in the number of bank frauds, with incidents escalating by 166% to reach 36,075 in FY24, up from 13,564 in the previous year. This surge indicates a growing challenge in the banking sector’s ability to safeguard against fraudulent activities.
Decline in Fraud Value
Contrasting the increase in fraud cases, the total value implicated in these frauds has seen a substantial decline of 46.7%, falling to Rs 13,930 crore in FY24 from Rs 26,127 crore in FY23. This suggests that while frauds are becoming more frequent, their financial impact per case might be diminishing.
Distribution by Bank Type
An examination of the bank group-wise distribution of fraud cases over the past three years reveals that private sector banks have reported the highest number of frauds. However, in terms of the value affected by these frauds, public sector banks bear the brunt, indicating larger sums are involved in fewer, but more significant, fraud cases in these institutions.
| Aspect | FY23 | FY24 | Change |
|---|---|---|---|
| Number of Fraud Cases | 13,564 | 36,075 | +166% |
| Total Value Involved (₹ Crore) | 26,127 | 13,930 | -46.7% |
| Main Fraud Types | Digital Payment, Loan Frauds | Digital Payment, Loan Frauds | Consistent Types |
| Detection Lag | High | High | No Improvement |
Predominant Fraud Categories
The report identifies two main categories of frauds based on their nature and the financial channels they exploit:
- Digital Payment Frauds: Predominantly occurring in card and internet transactions, these are most frequently reported by private sector banks and constitute the bulk of the fraud cases in terms of numbers.
- Loan Portfolio Frauds: These involve significant amounts and are mostly reported in the advances category, particularly by public sector banks. They impact the value dimension of banking frauds substantially.
Vintage and Detection of Frauds
The RBI’s analysis further sheds light on the detection of frauds, noting a significant lag between the occurrence and detection of fraudulent activities. For instance, frauds that took place in prior financial years comprised 94% of the fraud value reported in 2022-23 and 89.2% in 2023-24. This delay in detection underscores the challenges in timely fraud identification and mitigation in the banking sector.
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