Amount in Banking Fraud Jumps 8 Times to Rs21,367 Crore in First Half of FY25: RBI

Moneylife Digital Team 26 December 2024

Economy & Nation

While the number of bank frauds was significant during the first half (H1) of FY24-25, the amount involved in these cases jumped more than eight-fold to Rs21,367 crore, according to data from the Reserve Bank of India (RBI).

In its Report on Trend and Progress of Banking in India 2023-24, RBI says that based on the date of fraud reporting, the number of frauds during April to September this year stood at 18,461 involving Rs21,367 crore compared to 14,480 cases involving Rs2,623 crore, same period last year.

"Based on the date of occurrence of frauds, in FY23-24, the share of internet and card frauds in the total stood at 44.7% in terms of amount and 85.3% in terms of number of cases (Table IV.15). In FY23-24, the number of fraud cases reported by private sector banks (PVBs) accounted for 67.1% of the total. In terms of the amount involved, however, public sector banks (PSBs) had the highest share. In terms of number of frauds, the share of card and internet frauds was highest for all bank groups in FY23-24," RBI says.

According to the report, frauds present multiple challenges for the financial system in the form of reputational risk, operational risk, business risk and erosion of customer confidence with financial stability implications.

Instances of penalty imposed on regulated entities (REs) increased during FY23-24 across all bank groups, except foreign banks (FBs) and small finance banks (SFBs). "The total penalty amount more than doubled in FY23-24, led by public and private sector banks. The amount of penalty imposed on cooperative banks declined during the year, while there was an increase in instances of penalty imposition," RBI says.

The RBI report presents the performance of the banking sector, including commercial banks, cooperative banks and non-banking financial institutions, during FY23-24 and FY24-25 so far.

During FY23-24, the report says robust credit growth led the expansion of the consolidated balance sheet of scheduled commercial banks (SCBs). "The capital to risk weighted assets ratio (CRAR) of SCBs was 16.8% at end-September 2024, with all bank groups meeting the regulatory minimum requirement and the common equity tier 1 (CET1) ratio requirement. Asset quality improved, with the gross non-performing assets (GNPA) ratio falling to its lowest in 13 years at 2.7% at end-March 2024 and 2.5% at end-September 2024."'

For the sixth consecutive year, banks' profitability rose in FY23-24 and continued to rise in H1 of FY24-25 with the return on assets (RoA) at 1.4% and return on equity (RoE) at 14.6%, the central bank says.

According to the report, the combined balance sheet of urban co-operative banks (UCBs) expanded in FY23-24, with asset quality improving for the third consecutive year while capital buffers and profitability were strengthened.

"The non-banking financial companies (NBFC) sector exhibited double digit credit growth, while its unsecured lending contracted and asset quality improved further - the GNPA ratio dropped to 3.4% at end-September 2024, strong capital buffers kept the CRAR well above the stipulated norm at end-September 2024," RBI says.

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