As cashless transactions go up, so do frauds in public sector banks

A recent RBI report says the number of bank-related frauds involving more than Rs1 lakh has seen a sharp rise of over 20% between 2016-17 and 2017-18.

Published: 07th July 2018 10:43 PM  |   Last Updated: 08th July 2018 11:55 AM   |  A+A-

A cashier displays the new 2000 Indian rupee banknotes inside a bank in Jammu, November 15, 2016. (Photo | Reuters)

Reuters file image used for representational purposes.

NEW DELHI: If you thought the government’s aggressive championing of cashless transactions and digital platforms would help reduce banking fraud, think again. A recent RBI report says the number of bank-related frauds involving more than Rs1 lakh has seen a sharp rise of over 20% between 2016-17 and 2017-18. Frauds have gone from less than 5,000 to over 6,000 during this period. The total amount has also gone up from Rs 250 billion in 2016-17 to over Rs 300 billion in 2017-18. According to the report, Public Sector Banks (PSBs) have a disproportionate share of over 85 per cent of such frauds.

“A sharper rate of growth observed in total number of frauds in 2017-18, which is driven by a significant jump in card/internet banking related frauds. Banks are increasingly leveraging technology to deliver retail services and the significant buy-in from customers by their adoption of these delivery channels are anecdotally validated,” the report said.“The sharper increase in the number of frauds owing to card/internet banking related issues are pointers to the underlying vulnerability of this delivery channel,” it said.

The report said the composition of the fraud amount reported is largely dominated by frauds in loans and advances both in PSBs and private sector banks. It said in the last five years (2013-2018) about 83% of the frauds are related with loans and advances. The RBI report assumes significance given the fact that many high-profile cases of fraud related to loans have come up in the last one year, including the Nirav Modi-PNB fraud case involving over Rs13,000 crore. 

In another case of alleged loan fraud of IDBI Bank involving amount about Rs 600 crore, the CBI has named many senior bank officials. A significant deterioration in such assets in the PSB segment is possibly due to poor credit screening and deficiency in oversight by the banks. 

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  • Taj

    Looks like 2 not so connected scenarios here... what percentage of the increased fraud is attributable to the high profile loan advance cases? Seems to be the major chunk... also if you analyse the PNB case thoroughly
    5 months ago reply
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