Surge in Bank Fraud Cases in 2024

December 28, 2024

In the financial year 2024, banks reported increase in fraud cases, with a total of 36,066 incidents, more than doubles the 13,537 cases recorded in 2023. Despite the rise in the number of cases, the financial impact was notably lower, with fraud amounts reaching ₹13,175 crore, the lowest in a decade.

Types of Fraud Cases

The Reserve Bank of India (RBI) reported that internet and card frauds accounted for 44.7% of the total fraud amount and 85.3% of the total fraud cases. This indicates a concerning trend towards digital fraud, primarily targeting online transactions and card usage.

Private vs Public Sector Banks

Private banks reported the highest number of fraud cases, while public sector banks experienced larger financial losses. This disparity marks the varying vulnerabilities and challenges faced by different banking sectors in managing fraud risks.

Recently, the RBI imposed more penalties on banks for regulatory violations. Public sector banks faced 16 penalties totalling ₹23.7 crore, increase from ₹3.6 crore in 2023. Private banks received 12 penalties amounting to ₹24.9 crore, compared to ₹12.2 crore the previous year.

Causes of Digital Fraud

Many digital frauds arise from social engineering tactics, where customers are manipulated into divulging sensitive information. Additionally, the use of “mule” accounts has increased. These accounts facilitate fraudulent transactions, posing risks to both banks and customers.

RBI Recommendations

The RBI has advised banks to enhance their customer onboarding processes and improve transaction monitoring systems. Better coordination with law enforcement agencies is also essential to tackle systemic issues and mitigate fraud effectively.

The RBI is collaborating with banks and law enforcement to strengthen transaction monitoring and share best practices. These initiatives aim to control mule accounts and prevent digital frauds, thereby safeguarding the banking sector.

GKToday Notes:
RBI: The Reserve Bank of India is India’s central banking institution. It regulates monetary policy and oversees financial institutions. RBI plays important role in maintaining financial stability.
Mule Accounts: Mule accounts are bank accounts used to facilitate fraudulent transactions. They are often opened by unwitting individuals. These accounts pose risks to financial institutions.

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