{"id":3675,"date":"2024-07-15T09:00:15","date_gmt":"2024-07-15T03:30:15","guid":{"rendered":"https:\/\/bankerstrust.in\/column\/?p=3675"},"modified":"2024-07-16T14:14:17","modified_gmt":"2024-07-16T08:44:17","slug":"different-shades-of-bank-frauds","status":"publish","type":"post","link":"https:\/\/bankerstrust.in\/column\/different-shades-of-bank-frauds\/","title":{"rendered":"Different Shades of BANK FRAUDS"},"content":{"rendered":"

# Krishna Dasgupta, 72, a resident of Delhi\u2019s CR Park, recently lost Rs83 lakh after she was put under \u201cdigital arrest\u201d for over\u00a012 hours one day.<\/em><\/p>\n

What is digital house arrest? It is a tactic cybercriminals use to confine victims to their homes and scam them. They create fear by making audio or video calls, posing as law enforcement officers. This is done using AI-generated voices or video technology.<\/p>\n

It started with a phone call informing Dasgupta that her mobile number would soon be blocked. She couldn\u2019t allow this to happen as she lives alone in Delhi and needs to talk to her Mumbai-based daughter and son-in-law often. When she called the caller back, Dasgupta was told that her phone number was being used by another person who had been under the police scanner for using abusive language and pornographic photographs. After she shared her Aadhaar card details, she was informed that she was involved in a money laundering case and would be arrested within two hours.<\/p>\n

A young, handsome man in a police uniform asked her how much money she had in her bank accounts. Under a hypnotic spell, she ran from one bank to another throughout the day until she transferred all her savings to a particular account through RTGS. She came out of the spell\u00a0next morning when her daughter and son-in-law told her she had become a victim of fraud.<\/p>\n

# <\/em><\/strong>In the first week of July, a 23-year-old man in Hyderabad fell for a parcel scam and ended up losing Rs 12 lakh. The victim received a call from a person claiming to be from FedEx and was told that his Aadhaar number was being misused.<\/em><\/p>\n

What\u2019s the modus operandi of a parcel scam? Here, the fraud begins with a phone call from someone typically claiming to be from FedEx customer service. The caller informs the victim that a package linked to his\/her Aadhaar number has been intercepted because it allegedly contains illegal items. The victim is not aware of such a package, but the scammer will insist it was dispatched from Mumbai and is now stuck in customs due to the discovery of narcotics among the items.<\/p>\n

At the next stage, the scammer will threaten that the call will be transferred to the Mumbai Police Cyber Cell. Indeed, the victim will receive a call, supposedly from a police officer, threatening possible arrest. A private bank\u2019s recent advisory to its customers says, \u201cThe scammers use psychological tactics during calls to threaten the victim and obtain personal identification and bank details. They ask the victim to give his\/her Aadhaar and other identification details apart from bank information…\u201d<\/p>\n

Is an FIR staring at the victim? Will there be an arrest? How does one get out of money laundering accusations? The scared victim swiftly transfers money to avoid all these.<\/p>\n

Media reports suggest that in the past year, scam victims have lost crores of rupees in the name of courier companies like FedEx, DHL, Blue Dart, DTDC and others.<\/p>\n

# In mid-June, Venkatesh (name changed) received a message on WhatsApp from his friend who lives in the US. The moment his friend\u2019s photograph flashed on his phone, Venkatesh was excited since he had not heard from him in ages. His friend had just landed in Delhi and got to know his daughter broke her leg and was in a hospital. He needed some money urgently. Without batting an eyelid, Venkatesh transferred Rs80,000 to the bank account his friend mentioned to him.<\/em><\/p>\n

This happened in the morning. Hours later, in the afternoon, Venkatesh called his friend to check how his daughter was. His friend\u00a0took time to answer the call. From his voice, Venkatesh could tell that he had been sleeping. That was indeed the case\u00a0as it was\u00a0well past midnight in San Francisco, where his friend lives. No, he hadn\u2019t come to India. Neither had he asked for the money. The fraudster chatted with Venkatesh, using his friend\u2019s photo on his profile, which he had picked up from a social media account.<\/p>\n

These are some of the recent instances of fraud plaguing the Indian banking industry. Until recently, fraudsters used to send SMS messages relating to 5G upgrades, SIM blocks, pending KYC, or document verification. And, of course, there were calls, posing as bank officials. The Netflix series on Jamtara, based on true events around the phishing scams that take place in the city of Jharkhand, has featured this well, albeit with exaggeration to create the drama.<\/p>\n

The FY24 annual report of the Reserve Bank of India (RBI) says an assessment of bank group-wise fraud cases of the last three years indicated that while private sector banks reported the maximum number of frauds, the amount defrauded was higher for public sector banks (PSBs).<\/p>\n

In FY24, for instance, PSBs reported 7,472 incidents of fraud, less than one-third reported by private banks (24,210), but the money involved was three times more (Rs10,507 crore versus Rs3,170 crore).<\/p>\n

Overall, 36,075 cases of fraud were reported in FY24 involving Rs13,930 crore. In FY23, there were 13,564 fraud cases and the money involved stood at Rs26,217 crore; the comparable figures for FY22 were 9,046 cases and Rs45,358 crore defrauded.<\/p>\n

I am not delving deeper into the fraud figures beyond FY22 as they keep changing since banks continuously revise the figures. For instance, the RBI FY23 annual report had pegged that year\u2019s number of fraud cases at 13,553 (close to what the latest annual report mentions), but the amount mentioned was much higher \u2013 Rs30,252 crore. Also, frauds reported in a year may have occurred several years back.<\/p>\n

All RBI fraud data is for scams of at least Rs1 lakh reported during the year.\u00a0The\u00a0reported amount does not reflect the loss incurred by the banks or the customers. The actual loss would depend on the recovery.<\/p>\n

The RBI launched the Central Fraud Registry (CFR), a web-based online searchable database, in January 2016. The usage of CFR by the banks, especially PSBs, has taken time to pick up.<\/p>\n

The FY18 RBI annual report had pointed out that the number of fraud cases reported by banks had been around 4,500 in the past 10 years before rising to 5,835 in FY18. The money involved also witnessed a quantum jump in FY18, thanks to fugitive diamantaire Nirav Modi syphoning off Rs 14,000 crore from Punjab National Bank, using the so-called letters of undertaking.<\/p>\n

Another interesting feature has been that, in terms of value, the frauds are reported primarily in the loan portfolio, but when it comes to numbers, digital frauds are far more prevalent than loan frauds. While PSBs are primarily\u00a0at the receiving end ofloan frauds, the digital frauds mostly happen on the private bank turf.<\/p>\n

The trend started in FY20 when, for the last time, the loan portfolio of the banking industry saw more frauds, both in terms of number and value. The phenomenal progress in digital banking, particularly in the payments space, changed the fraud landscape FY21 onwards, when incidents of digital frauds (relating to the use of cards, the internet, and everything else) overtook loan frauds.<\/p>\n

Since the bad loan crisis of the last decade, banks have improved their credit appraisal, underwriting, and risk management. This will contain loan frauds. Digital frauds are a different game altogether. Customer education is the key to combating this.<\/p>\n

As I write this column over the weekend, my mobile phone flashes an SMS, which I reproduce here verbatim: “India Post: Your package has arrived at the warehouse and we attempted delivery twice but were unable to do so due to incomplete address information. Please\u00a0update\u00a0your address details within 48 hours, otherwise your package will be returned. Please update your address in the link: https:\u00a0xxx. After the update is complete, we will re-deliver within 24 hours, India Post!”<\/p>\n

If I click it, I will not be in the mood to write my column next week. You know why.<\/p>\n

This column first appeared in <\/strong>Business Standard<\/em><\/strong><\/p>\n

The writer, a Consulting Editor of Business Standard, is Senior Adviser to Jana Small Finance Bank<\/strong><\/p>\n

Writes Banker’s Trust every Monday in Business Standard.<\/strong><\/p>\n

Latest book <\/strong>Roller Coaster: An Affair with Banking<\/em><\/strong><\/p>\n

Twitter: TamalBandyo<\/strong><\/p>\n

Website: <\/strong>https:\/\/bankerstrust.in<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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