Bank frauds fall by 56 per cent in FY21: RBI data

As businesses took out fewer loans, bank frauds declined both in the current and previous fiscal. In FY21, fresh fraud occurrences fell by a staggering 56% over FY20, according to RBI data. The central bank, which also reports frauds based on the date of reporting by banks, found that the value of frauds too dipped in FY21 by 25% over FY20. 

According to the report on Trend and Progress of Banking in India 2020-21 released Tuesday, fresh frauds in FY21 stood at Rs 14,158 crore as against Rs 32,290 crore seen in FY20. Based on the date of reporting, the amount of frauds fell to Rs 1.38 lakh crore in FY21 from Rs 1.85 lakh crore in FY20.

An overwhelming majority of the cases, or 99% to be precise, relate to advances or loans extended to businesses big and small and retail loans as well. But in terms of volume, the number of fraudulent card or internet transactions is on the rise and accounted for 35% of the total number of cases in FY21. However, in terms of value, it’s negligible at Rs 119 crore.   

For the first six months of the current fiscal, there were nearly 1,600 instances of frauds aggregating Rs 353 crore. Of this, over 1,100 cases pertain to card/internet transactions, though the value stood at Rs 32 crore. But the increase in number is alarming as it erodes customer confidence just when the government’s focus on digital banking is taking shape. Interestingly, private banks accounted for a majority for card, internet and cash-related cases, while the major share of loan-related cases pertained to state-run banks. 

That said, in FY21, there was a marked increase in frauds related to private banks both in volume and value. During the first half of FY21, private lenders accounted for over half the number of reported cases, though in value terms, the share of public sector lenders was higher, indicating predominance of high value frauds.  As the central bank stepped up vigilance, banking frauds have been declining.