Frauds in banks: Numbers decline, but amount increases sharply

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While the number of frauds reported by banks to Reserve Bank of India (RBI) declined between Fy10 and FY13, the amount involved has increased by 324 per cent. According to RBI, nearly 80 per cent of all fraud cases involved amounts less than Rs 1 lakh, while on an aggregated basis, the amount involved in such cases was only around 2 per cent of the total sum involved. The large value fraud cases (Rs 50 crore and above) has increased more than ten-fold from three cases in FY 2009-10.

Private sector and the foreign bank groups accounted for a majority of frauds by number (82.5%), and the public sector banks (including SBI Group) accounted for nearly 83% of total amount involved in all reported frauds.

The banking regulator has divided frauds into three categories: technology-related , KYC-related and advances-related. Frauds related to the advances portfolio account for the largest share of the total amount involved. Public sector banks have accounted for a substantial chunk of the total amount involved in such cases.