January , 2023
Banks witnessing decrease in fraud cases
16:30 pm

Pritha Misra

The banking sector has witnessed a decrease in fraud cases in this one year. Over one hundred crores worth of fraud cases have decreased in the banking sector between 2021 and 2022. According to government data,118 fraud instances were reported in private and public sector banks in FY22, which was down from 265 in FY2020.The overall number of fraud cases involving more than 100 crore rupees at public sector banks (PSBs) decreased to 80 from 167 in FY 2021. For lenders in the private sector, there were 38 cases instead of 98 in the previous fiscal year. For public sector banks, the total sum has decreased from `65,900 crore in FY 21 to `28,000 crore.

The amount engaged in loan fraud has decreased over the past three years, according to RBI data. The sums are based on the year that the loans are identified as fraudulent and disclosed, even though the fraud may have taken place years earlier. The reported amount does not reflect the size of the loss experienced but only the size of the loan account. The amount of the loss is altered by the recovery. When money is raised for one reason and then used for another, loans are typically deemed fraudulent.

Steps taken to check frauds

The RBI has been taking several steps to stop frauds, including enhancing the effectiveness of the Early Warning System (EWS) framework, strengthening the fraud governance and response system, enhancing data analysis for transaction monitoring, and establishing a specific Market Intelligence (MI) Unit for frauds. In cooperation with Reserve Bank Information Technology Private Limited, the Reserve Bank of India had previously conducted research on the implementation of the EWS framework in a chosen group of Scheduled Commercial Banks during 2021–2022. A few institutions also employed machine learning (ML) methods to assess the efficacy of EWS. 

Reasons for the decline in fraud cases

Due to their own limitations, many banks are subject to lending restrictions because of high levels of subprime loans. Banks have been sluggish to issue business loans. Additionally, since the insolvency law was introduced, corporations have been phasing out their balance sheets. Banks recorded 4,607 scams involving advances in FY20, totalling `1.8 lakh crore. The quantity decreased to 3,496 in FY21, and the sum decreased to `1,36,429 crore. With 3,838 loan frauds reported by banks totalling `58,303 crore in FY22, there was a significant decline. According to the date of occurrence, advance fraud only decreased by `6042 crore for FY22 from `14,973 crore.


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