Amount involved in loan frauds detected in FY24 falls 52%

The amount involved in loan frauds are on the decline. According to the RBI Annual Report, amount involved in loan frauds have come down to Rs 11,772 crore in FY24, down from Rs 24,685 crore in FY23. Loan frauds amounting to Rs 43,272 crore were reported in FY22.  However, the number of loan frauds are on the rise. In FY24, 4,133 cases of loan frauds were reported, up from 4,090 cases reported in FY23.

Meanwhile, there has been a 166% jump in the number of cases bank frauds reported in FY24, reaching over 36,000 compared to FY23’s 13,564. However, the good news is that the total amount stolen has almost been cut in half (down 46.7%), going from Rs 26,127 crore to Rs 13,930 crore, according to the Reserve Bank’s annual report.

Frauds have occurred predominantly in the category of digital payments (card/internet), in terms of number. In terms of value, frauds have been reported primarily in the loan portfolio.

The report also reveals some interesting trends:

Digital Payments Under Attack: Criminals seem to be focusing more on digital transactions (card/internet) for both the number of attempts and the total amount stolen.

A Tale of Two Banks: Private and public sector banks face different fraud challenges. Private banks are seeing a surge in small value digital scams, while public sector banks are battling loan portfolio-related frauds.

Slow Detection, Big Impact: There’s a concerning delay between when a fraud occurs and when it’s discovered. Additionally, a large portion of the reported frauds happened in previous years, highlighting potential issues with timely identification and resolution. The amount involved in frauds that occurred in previous financial years formed 94.0 per cent of the frauds reported in 2022-23 in terms of value. Similarly, 89.2 per cent of the frauds reported in 2023-24 by value occurred in previous financial years.

Overall, while the total amount stolen has decreased, the increasing number of frauds, especially in digital payments, requires attention. Banks need to improve their detection and prevention systems, and address the issue of older frauds still impacting the system.

Also See: RBI bars Edelweiss Asset Reconstruction Company from acquiring financial assets