A striking rise in the frequency of payment frauds has been recorded in India, as fresh statistics from the Reserve Bank of India (RBI) demonstrate a marked increase in financial misdemeanors. Within just a six-month span concluding March 2024, domestic payment fraud occurrences have surged by 70.64 percent, leading to a significant monetary spike—to the tune of Rs 2,604 crore—from the preceding year’s Rs 1,526 crore during the identical interval.
Signaling a mounting challenge for the financial landscape, the volume of fraud cases also experienced an upsurge, escalating to a staggering 15.51 lakh in the period ending March 2024, up from the previous period’s 11.5 lakh cases, as per RBI’s detailed analysis.
In its bid to present a comprehensive overview, the RBI has narrowed its focus to domestic financial transactions. The latest data compilation methodology encompasses various facets of digital commerce, including transactions made with FASTags, digital bill payments, as well as card-to-card transfers executed via ATMs. Nonetheless, certain categories—such as failed transactions, chargebacks, reversals, and issues stemming from expired cards or wallets—have been deliberately omitted from this analysis. The source of this critical data on domestic payment fraud statistics springs from scheduled commercial banks (excluding Regional Rural Banks), non-bank Prepaid Payment Instrument (PPI) issuers, and non-bank credit card issuers, all filtered and structured within the Central Payments Fraud Information Registry (CPFIR).
Scrutinizing March alone, the figures are unnerving with as many as 2.57 lakh payment fraud instances, involving a total of Rs 471 crore in compromised funds. The preceding month of February was marginally better, with 2.53 lakh recorded frauds accounting for Rs 503 crore.
Payment frauds are far from a trivial concern, resulting in reputational, operational, and business risk for banking institutions, not to mention the eroding trust of consumers in the banking system which could have far-reaching financial stability implications. Scammers continue to innovate and exploit new loopholes despite stringent regulations and advancements in security technologies.
According to a recent report by the RBI, adoption of modern technologies, while bolstering banking operations’ efficiency and effectiveness, has opened new doors for fraud and data breaches. The report emphasizes a collective effort—from regulators, banks, customers—to defend the system against such threats. The RBI has reaffirmed its commitment to continually revising regulations in order to shield customers and simultaneously foster innovation without restraint.
In a noteworthy disclosure dated December 27, 2023, the RBI alerted the banking sector to a sudden proliferation of frauds within the credit & debit card and internet banking domains. Remarkably, while the average transaction value involved in these frauds plummeted by 85 percent during the April-September period of 2023-24, the number of incidents in the card and internet sector rocketed by 624 percent, with respect to the date of reporting.
The card and internet segments were hit particularly hard, with a leap to 12,069 cases involving Rs 630 crore between April and September of 2023-24, a drastic increase from the 2,321 cases tallying to just Rs 87 crore in the same span of the preceding year. Across the board, banks documented 14,483 fraud cases involving Rs 2,642 crore during April-September of 2023-24, in contrast to the 5,396 cases involving Rs 17,685 crore in the corresponding period of the previous year.
As the RBI compendium reveals, banks and Non-Banking Financial Companies (NBFCs) welcomed a sizable influx of credit card subscribers—specifically 1.65 crore new users—during the fiscal year 2024, elevating the cumulative user base to an impressive 10.18 crore. This increase parallels a record-breaking spike in credit card transaction volumes, which reached an unprecedented Rs 164,223 crore in March 2024, eclipsing the previous month’s Rs 149,206 crore. Point-of-sale transactions alone commanded a hefty Rs 60,378 crore in March 2024.
The escalation in credit card usage has spurred banks into a fiercely competitive race to secure new clientele. Banks are enticing prospective users with alluring incentives—from reward points, the provision of Equated Monthly Installment (EMI) facilities, to even dishing out personal loans predicated on individuals’ credit card standings. Bank officials highlight how card users’ credit rating scores have become a pivotal criterion for extending additional credit facilities.
In the face of this worrisome trend, the financial sector braces for continued vigilance and ingenuity to outpace the inventiveness of fraudsters who ever so persistently challenge the robustness and security of the monetary system.
