State-owned lenders contribute maximum to bank fraud amount, warns RBI

Bank frauds are on the rise with public sector lenders contributing the maximum to the fraud amount compared to the private sector banks, warns the RBI annual report published on Friday.

An assessment of bank group-wise fraud cases over the last three years indicates that while private sector banks reported a maximum number of frauds, public sector banks contributed the maximum to the fraud amount.

The data showed while the number of frauds by private sector banks was at 58.8 per cent of the total frauds committed in the banking system in 2021-22, the number of frauds reported was bigger in the public sector banks at nearly 67 per cent of the total banking frauds.

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An amount of over Rs 40,000 was involved in nearly 3100 fraud cases in public sector banks. In their private peers, the number of frauds was bigger at over 5,000 but the amount involved was less than half compared to public sector banks in 2021-22.

RBI said the frauds have been occurring predominantly in the loan portfolio (advances category), both in terms of number and value.

While the number of frauds reported by private sector banks was mainly on account of small value card/internet frauds, the fraud amount reported by public sector banks was mainly in the loan portfolio.

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The central bank said the frauds reported during 2020-21 and 2021-22 show a significant time lag between the date of occurrence of fraud and its detection.

Nearly 94 per cent of the frauds in 2021-22 by value occurred in previous financial years as against 92 per cent recorded in 2020-21.

The regulator has published on its website BE(A)WARE – a booklet on the common modus operandi used by fraudsters and precautions to be taken while carrying out various financial transactions.