Banking frauds are on a steep rise in India. Recent RBI data revealed that private banks saw the most number of frauds in FY22. Public sector banks, on the other hand, accounted for the highest frauds in terms of value. 1 2 The data further revealed that most (42%) of these frauds were in the Advances segment (which contributed to nearly the entire fraud value). Meanwhile, Cards/Internet was the second largest segment in terms of number of frauds.
Technology in financial services is rapidly evolving, but so are criminal minds who seek newer avenues to defraud individuals and financial institutions every day. Another challenge affecting FIs is the time lag for fraud detection, as highlighted by the RBI report.
Most of these frauds come under the following four categories: Identity, contactability, income falsification, and diversion of funds. Delving into detail will help understand these better.
Identity Fraud: It is not uncommon for one’s identity to get stolen in the digital age, where privacy may be illusory. It is often that a person’s personal information is misused by another (impersonator) without authorization to commit a crime or defraud that person or another. Common ways in which identity fraud occurs in banking is criminals use someone else’s bank statements and identity documents like Aadhar, PAN, etc. to avail credit.
Income Falsification Fraud: This is a widely used tactic by fraudsters to showcase a false financial situation by forging…
