Bank frauds up but value declines 46% to ₹13,930 cr in FY24

Bank frauds declined in value by 46.6% year-on-year (YoY) to ₹13,930 crore in the financial year 2023-24, compared to ₹26,127 crore the previous year. In contrast, the number of bank frauds surged by 165.9% YoY in FY24, reaching a staggering 36,075 cases, up from 13,564 in FY23, according to the Reserve Bank of India’s annual report released on May 30.

The majority of frauds in terms of frequency have occurred in the realm of digital payments (cards/internet), the report says. However, when considering the monetary value, most frauds have been reported in the loan portfolio in the advances category.

“While small value card/internet frauds contributed maximum to the number of frauds reported by the private sector banks, the frauds in public sector banks were mainly in loan portfolio,” the RBI report states.

A closer look at the data from the past three years reveals that private sector banks saw the highest number of fraud incidents, whereas public sector banks accounted for the largest monetary losses.

The central bank's annual report highlighted a notable delay between when frauds occur and when they are detected, based on an analysis of fraud cases from 2022-23 and 2023-24. It revealed that 94.0% of the total value of frauds reported in 2022-23 involved incidents from previous financial years. Similarly, in 2023-24, 89.2% of the reported fraud value stemmed from frauds that happened in earlier years.

The effect of new asset classification norms on the gross non-performing assets (GNPAs) reported by NBFCs was analysed. GNPAs for the NBFC sector declined from 6.3% of gross advances as of March 31, 2022, to 5.9% by September 30, 2022, the implementation cut-off date for the new norms. This figure further decreased to 5.0% by March 31, 2023, and to 4.6% by September 30, 2023.

"The Department has set out the following goals for 2024-25: Setting up of cyber range to augment cyber incident response capability of SCBs (Utkarsh 2.0); To augment supervisory capabilities by a suite of SupTech data tools on micro-data analytics and other similar use cases using artificial intelligence (AI) and machine learning (ML) [Utkarsh 2.0], Reviewing the Supervisory Action Framework (SAF) for UCBs, Expanding the scope/coverage of IT examination for level III and IV UCBs," the report states.

The report states that the RBI introduced the PCA framework for NBFCs on December 14, 2021. It also mentions that the framework was reviewed and extended to government NBFCs (excluding those in the base layer) and would become applicable from October 1, 2024.