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HomeBanking and FinanceBanks saw highest number of frauds in digital payments in FY23: RBI

Banks saw highest number of frauds in digital payments in FY23: RBI

Banks have witnessed maximum number of frauds in digital payment category during the fiscal ended 2023-24, according to the RBI annual report 2022-23.

In FY2023, the total number of fraud cases in the banking system were 13,530. Of this almost 49 per cent or 6,659 cases were in the digital payment – card/internet – category.

In the last two years, the highest number of fraud cases were in loan portfolios of banks.

There was a 49 per cent reduction in the amount involved in the total frauds reported during FY2023 over FY2022.

In terms of value, banks reported frauds primarily (Rs 28,792 crore) in the advances category in the previous fiscal. The total amount of fraud in the digital payment category stood at Rs 276 crore in FY23.

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

“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 portfolios,” the report said.

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An analysis of the vintage of frauds reported during 2021-22 and 2022-23 shows a significant time-lag between the date of occurrence of a fraud and its detection.

The amount involved in frauds that occurred in previous financial years formed 93.7 per cent of the frauds reported in 2021-22 in terms of value. Similarly, 94.5 per cent of the frauds reported in 2022-23 by value occurred in previous financial years.

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In order to improve data reliability in Fraud Monitoring Returns (FMR) submitted by banks, the RBI advised lenders to carry out proper due diligence and ascertain the involvement (with credible proof/ evidence) before including or adding names of the non-whole time director in the FMR/ CRILC (Central Repository of Information on Large Credits) while reporting fraud /noncooperative borrower.

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