The RBI report said fraud poses several challenges to the financial system in the form of reputational risk, operational risk, business risk and loss of customer confidence with financial stability implications. The share of Internet and card fraud in the total was 44.7% in terms of amount and 85.3% in terms of number of cases. In 2023-24, the number of fraud cases reported by private sector banks (PVBs) was 67.1% of the total. However, in terms of amount involved, public sector banks (PSBs) had the highest share of card and internet frauds among all bank groups in 2023-24.
The incidence of penalties imposed on regulated entities (REs) increased during 2023-24 across all bank groups except foreign banks and small finance banks, RBI data said. The total penalty amount more than doubled to Rs 86.1 crore in 2023-24, with public and private sector banks leading the way. The amount of penalty imposed on co-operative banks declined during the year, while the number of penalty cases increased. While many cases of digital fraud result from social engineering attacks on customers, there has also been a sharp increase in the use of mule bank accounts to carry out such frauds, the RBI said. This exposes banks to not only serious financial and operational risks but also reputational risks. Banks, therefore, need to strengthen their customer onboarding and transaction monitoring systems to keep track of dishonest activities,” it said.
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