Frauds on the Rise: Card & Internet Scams Spike, Alerting RBI and Consumers

Mumbai, India – In a recent report, the Reserve Bank of India (RBI) has shed light on the state of financial frauds during the first half (H1) of the 2023-24 financial year, unveiling some remarkable insights. The report indicates a significant decline of 85 percent in the average amount involved in frauds, while simultaneously highlighting a staggering 624 percent surge in the number of frauds within the card and internet segment.

According to the RBI’s “Report on trend and progress of banking,” the number of fraud cases in the card and internet segment soared to 12,069 cases during H1FY24, involving a sum of Rs 630 crore. This represents a stark increase compared to the 2,321 cases and Rs 87 crore recorded in the same period the previous year.

However, the overall picture is somewhat nuanced, as banks reported a total of 14,483 cases of fraud during the period, involving Rs 2,642 crore. This might seem like a decrease from the 5,396 cases and Rs 17,685 crore reported in the previous year. Nevertheless, the decline in the average amount involved in these frauds is notable.

When considering the date of occurrence, the report reveals that the average amount involved in frauds significantly decreased during the first half of 2023-24. In this period, banks reported 8,363 fraud cases amounting to Rs 377 crore. This marks a substantial drop from the 13,242 cases and Rs 2,146 crore recorded in the full fiscal year of 2022-23.

The report points out that the majority of these frauds were concentrated in the card and internet segment, with 7,382 fraud cases amounting to Rs 285 crore. This suggests a pressing need for heightened security measures in the digital banking space.

It is interesting to note that there was a remarkable decrease in frauds related to advances, dropping from Rs 1,094 crore in the previous year to just Rs 26 crore in the first half of the current fiscal year. This decline could be attributed to various factors, including improved lending practices and enhanced vigilance.

The report also highlights the distribution of fraud cases among different types of banks. Private banks accounted for 66.2 percent of the total reported fraud cases. In terms of the amount involved, public sector banks (PSUs) had a higher share. Notably, while most frauds in PSBs were related to advances, private sector banks (PVBs) were the majority contributors to card, internet, and cash-related fraud cases.

The RBI underscores the significant risks posed by frauds, including reputational, operational, and business risks for banks. Such incidents also erode customer trust in the banking system and can have implications for financial stability. Despite a rise in the number of fraud cases reported during H1:2023-24, the amount involved was only 14.9 percent of the previous year’s total, suggesting a reduction in the severity of individual fraud incidents.

The report concludes by emphasizing the growing importance of technology in banking operations. While technological advancements have enhanced efficiency, they have also brought about increased risks of fraud and data breaches. The RBI calls for collaborative efforts among regulators, banks, and customers to safeguard the banking system from these threats while ensuring that innovations are not stifled.

In summary, the RBI’s report provides a comprehensive overview of the state of financial frauds in the first half of the 2023-24 financial year, highlighting both challenges and opportunities for the Indian banking sector. The surge in card and internet-related frauds serves as a stark reminder of the need for robust cybersecurity measures in an increasingly digital world.



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