Big bank frauds cost India dearly while small scams steal headlines: RBI
Corporate loan scams make up over 90 pc of fraud losses in Indian banks, yet digital cons like phishing and 'digital arrests' grab more public attention
Elaborate 'digital arrests' to swindle money through banking channels, carried out by fraudsters impersonating as law enforcement officials, have often hit the headlines in recent times, but these are relatively 'small' crimes.
Major banking frauds often involve formal sector players—wealthy individuals and corporate entities—who deal directly with bank officials, allowing these crimes to go largely unnoticed.
Also read: ‘Digital arrests’ will end only when people stop fearing police
The Reserve Bank of India’s (RBI) Report on Trend and Progress of Banking in India 2024-25, released on Monday (December 29), makes this very clear.
Frauds through 'advances'
The report shows that banking fraud primarily occurs through “advances” — defined by the RBI as “cash credit, term loans, bills and others.” This primarily involves unscrupulous borrowers using deception to obtain loans or credit facilities with no intention of repayment, resulting in financial loss for the bank. A typical advance fraud involves high-value loans given to corporate entities.
What is banking fraud?
It's a serious financial crime where deception or manipulation is used to unlawfully obtain money, assets, or financial benefits from a bank or its customers. It typically involves schemes like identity theft, phishing, fake loan applications, and unauthorised account access.
In the 10 fiscals from FY16 to FY25, banks reported “advances” accounting for Rs 4.55 lakh crore or, 91.4 per cent of the total banking frauds of Rs 4.98 lakh crore.
Also read: Karnataka lost Rs 5,474 crore to cyber fraud in 3 years: Minister
In the first half of financial year 2025-26 ( H1 of FY26), “advances” accounted for 81 per cent of Rs 21,515 crore of total fraud. This was up 30 per cent from the corresponding period in FY25, even though the number of fraud cases went down by 72 per cent.
The following graph shows how “advances” dominate banking frauds. All the cases involve frauds of Rs 1 lakh or more.
Frauds through 'cards/internet'
Banking frauds through “cards/internet”, usually carried out by conmen through digital arrests, phishing, malware, identity theft and other ways, were relatively small — Rs 2,192 crore, or 0.6 per cent of the total banking fraud during FY16-FY26.
In H1 of FY26, its share was 0.07 per cent of the total value of banking frauds. That would explain why the graph didn’t carry the “card/internet” category.
Also read: The luxury home that didn’t exist: Delhi Police bust property racket, 5 held for Rs 12-cr fraud
Though the value is small, the number of such fraud cases is large, explaining why such cases hit the headlines often. The following graph maps the total number of banking frauds.
The RBI report also made these remarks about banking frauds in FY25:
a) In FY25, public sector banks (PSBs) accounted for 70.7 per cent of banking frauds in value terms, had the “highest share of frauds related to advances, both in terms of number of cases and the amount involved”. The share of card/internet frauds declined across all bank groups in both number and amount involved.
b) Private banks (PVBs) accounted for 59.3 per cent of the number of frauds, card/internet-related frauds accounted for larger number of cases but advances accounted for most in value.
