Banking Frauds Mitigation Measures In Place, Frauds Basis The Date Of Occurrence Declining: FM

In the fast-evolving world, digital technology is penetrating almost everything. Banking has become way more convenient and faster now than a few years ago. However, along with it came the risks of fraud through digital modes. On the question of the details of the banking fraud-related cases in the Loksabha, Union Finance Minister Nirmala Sitharaman answered through a written reply, “Comprehensive steps have been taken to keep a check on the banking frauds and deter fraudsters, enabled by which amount involved in frauds based on the date of occurrence has declined from Rs 33,757 crore in FY 2019-20 to Rs 4,224 crore in FY 2023-24, and further to Rs 837 crore in FY 2024-25 (up to December 2024)”.

The date of occurrence is when a fraud actually occurs, however, sometimes, the frauds are not reported when they occur. As per the RBI’s report, Trend And Progress Of Banking In India, 2023-24, “Frauds reported in a year could have occurred several years prior to the year of reporting”. Therefore, the data for frauds based on the occurrence can be different from the data for frauds based on the date of reporting.

Measures Taken To Mitigate Banking-Related Frauds:

The minister said that the Reserve Bank of India (RBI) has laid down the directions to prevent bank-related frauds. “Banks are required to report the incidents of fraud immediately to different law enforcement agencies (LEAs), viz. the Central Bureau of Investigation, State Police, etc., depending on the amount involved in the fraud. RBI has apprised that information regarding average investigation time in bank fraud cases is not maintained by it”, the reply mentioned.

RBI has taken several measures to mitigate fraudulent activities, and, as per RBI's data, the amount involved in bank fraud has been on a declining trend. This is despite the number of frauds that have been fluctuating, increasing in some years and decreasing in others. 

The minister highlighted the measures implemented by the RBI. These include the Central Fraud Registry, an online database of frauds reported by the banks for RBI for timely identification and prevention, an automated Early Warning Systems (EWS) under the PSB Reforms Agenda, rules for banks for proper documentation of borrowers availing loans of more than Rs 50 crore, direction to banks to provide deficient third-party services to the Indian Banks’ Association, launch of the Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS) portal by the Indian Cyber Crime Coordination Centre (I4C), establishing a National Cyber Forensic Laboratory for forensic analysis of cybercrimes, among others.

According to the minister, due to these measures, “Up to January 2025,  Rs. 3,919 crore has been saved in more than 11.20 lakh complaints”.

No Proposal Under Consideration To Create A Special Investigation Unit For Banking-Related Frauds:

The reply also clarifies that there is no record of maintenance of the investigation time taken in banking frauds. On the question of whether the Government has data on the average investigation time in bank fraud-related cases, the reply says, “RBI has apprised that information regarding average investigation time in bank fraud cases is not maintained by it”.

Also, there is no proposal under consideration as of now to create a special investigation unit for banking-related frauds. There is already a Banking Security and Fraud Branch of the Central Bureau of Investigation (CBI) and Economic Offence Wing in the State police, to take care of such matters.