Fake banks, bogus courts, and cybercrime: India’s deepening conscape

Even after the Reserve Bank of India (RBI) significantly liberalised its licensing policy to open a bank branch, multiple approvals are still required before a banking entity can open a new branch. Given these regulatory checks, it is surprising that a fake State Bank of India branch could operate for months in Chhapora village, Chhattisgarh. The masterminds behind this scam not only duped locals into depositing money but also profited by making illegal job appointments. This is not an isolated incident.

In November 2022, Chennai Police’s Central Crime Branch busted a racket operating nine branches of the so-called Rural and Agricultural Farmers’ Co-operative Bank in Chennai and other parts of Tamil Nadu. This too was a fake bank.

Fraud is no longer limited to financial scams. In Gujarat, in October 2024, police uncovered an entire fake court—with a fake judge handing down verdicts. This fraud had been running since 2019. In the same state, a bogus toll plaza operated undetected for 12 years, collecting Rs 75 crore before an FIR was finally filed against the scamsters.

Scammers are not just after money; they are endangering people’s health too. While a few spurious drug makers have been caught, many may be continuing to operate. In a sting operation, one drug maker admitted that any MRP could be printed if orders were placed in bulk.

Rajeev Kumar Dubey and Rashmi Dubey, a couple in Kanpur, adopted a different modus operandi to defraud people. They opened a therapy centre, Revival World, promising a miraculous oxygen therapy that could turn a 60-year-old into a 25-year-old. Allegedly, they scammed Rs 35 crore from gullible customers.

Even after 77 years of Independence, India has yet to achieve 100% literacy. But that hasn’t stopped fraudsters from outwitting even educated professionals in the United States, Britain, and Canada. Call centres in Gujarat—now notorious for running international scams—promise medical supplies, antivirus software, cryptocurrency investments, and more. Similar fraudulent operations have been busted in Gurugram, Noida, Mumbai, and Indore. Yet, no one knows how many are still active.

According to RBI’s Report on Trend and Progress of Banking in India, the number of reported bank fraud cases surged in the first half of the current fiscal year. In 18,461 reported cases, the amount involved has jumped eightfold to Rs 21,367 crore.

In recent years, cyber fraud has overshadowed all other types of frad. People are being duped through parcel scams, SIM deactivation warnings, fake work-from-home opportunities, and threats of electricity disconnection. Many of these frauds are run by international gangs. It is not uncommon to receive calls from numbers traced to Syria, Türkiye, Saudi Arabia, Malaysia, Thailand, Singapore, and even the US.

Fraudsters use fake notices, arrest warrants, and CBI warnings to put people under digital arrest, extorting money from them. Senior citizens, in particular, have lost their life savings to these criminals. Data from the Indian Cyber Crime Coordination Centre shows that India lost Rs 11,333 crore in the first nine months of 2024.

Beyond cyber scams, fraud has infiltrated nearly every sector—education, real estate, investment, and job markets. Yet, for every reported case, many go unreported. The sheer scale of frauds in India is hard to fathom.

When it comes to fraud, the age-old wisdom of ‘prevention is better than cure’ is rarely applied at a systemic level. Some steps have been taken—banks and financial institutions have introduced fraud prevention measures, and the government has set up a dedicated cybercrime reporting portal and helpline. Cyber police stations have also been established. But these measures, while helpful, remain limited.

The troubling reality is that committing fraud in India is easier than it should be. This ease should be a cause for national outrage, but there is little visible concern. Politicians constantly talk about improving the ease of doing business—whether that has succeeded is debatable. But the ease of committing fraud has undoubtedly increased. 

One commonly cited reason for rising fraud is the growing use of digital payments. Fraudsters exploit vulnerabilities in credit and debit card transactions,
mobile wallets, and Unified Payment Interface systems. They are often found to be more technologically adept than their victims. Many innocent people have been tricked into believing they are involved
in a crime, transferring money out of fear after being shown fake documents or receiving calls from imposters posing as government officials.

Police and investigative agencies do their job. Some fraud cases are solved; others remain open—just as with any crime. The bigger issue is deeper: Why are so many people trying to make money by committing fraud? Is growing unemployment a factor, or is the risk-reward here in favour of fraudsters? Data shows a poor record of recovering defrauded money and conviction. Another worrisome fact is politicians being found linked with several fraud operations. Immigrants deported from the US to India recently have narrated how they were cheated by fraudsters whose networks stretch from Gujarat to Punjab. It is hard to believe that such large-scale frauds could operate without political cover.

The ease of committing fraud in India is not just an economic issue—it is a serious social concern. The first step to finding solutions is acknowledging the scale of the problem, and we should do it before India earns the reputation as the scamguru of the world.

(The writer is a former banker)