Large-Ticket Frauds Drive Sharp Rise in Bank Fraud Value Despite Fewer Cases: RBI Report

The value of bank frauds in India has risen sharply over the past two years, highlighting a growing concentration of large-ticket frauds even as lenders reported a significant decline in the number of incidents, according to data from the Reserve Bank of India’s annual report.

The total amount involved in reported frauds jumped to ₹480.2 billion in 2025-26 from ₹110.1 billion in 2023-24, an increase of more than four times. Over the same period, the number of fraud cases fell dramatically to 10,114 from 35,800, indicating that while fraud occurrences have become less frequent, their fiscal impact has grown substantially.

The divergence suggests that banks have made progress in containing smaller and technology-driven frauds but continue to face risks from high-value credit exposures.

Public sector banks accounted for the largest share of fraud amounts during the period. The value of frauds reported by state-owned lenders rose from ₹80.9 billion in 2023-24 to ₹357.1 billion in 2025-26, representing nearly three-fourths of the total amount involved during the latest year. Private sector banks also witnessed a steady increase, with fraud amounts rising to ₹114.0 billion from ₹26.7 billion over the same period.

The trend is particularly visible in the composition of fraud. RBI's assessment shows that card, internet and digital payment-related incidents accounted for the highest number of fraud cases during 2023-24 and 2024-25. However, in 2025-26, the advances category emerged as the largest contributor to overall fraud cases.

More importantly, advances-related frauds accounted for the dominant share of fraud value across all three years, underscoring that the biggest losses continue to originate from lending activities rather than payment channels. This indicates that even as banks strengthen controls over digital transactions, vulnerabilities linked to credit appraisal, monitoring of borrower accounts, and post-disbursement oversight remain a significant concern.

The amount involved in advances-related frauds rose to ₹407.74 billion in 2025-26, from ₹303.67 billion a year earlier and ₹89.17 billion in 2023-24.

The number of frauds in card, internet and digital payments declined substantially to just 293 in 2025-26, from 13,332 in 2024-25 and 28,836 in 2023-24.

The data also reveal that foreign banks, small finance banks and payments banks contributed only a small portion of the overall fraud amount, although some segments recorded a gradual increase in value terms.

Recognising the growing sophistication of financial frauds, the RBI is also expanding the use of technology-led surveillance tools. The central bank's fintech department is scaling up MuleHunter.aiTM, an artificial intelligence-based solution designed to identify mule accounts used to route illicit funds. The platform uses behavioural and transactional patterns derived from ecosystem-wide fraud data to assign a probability score indicating the likelihood of an account being a mule account.

As of March 31, 2026, MuleHunter.aiTM had been implemented across 26 banks, while deployment is underway at four more lenders. RBI plans to further expand its adoption across the banking system. Once a suspected mule account is flagged, the decision on follow-up action rests with individual banks, which undertake enhanced due diligence and internal assessments before taking action.

The sharp rise in fraud value despite a declining number of incidents may also reflect the reporting and recognition of legacy loan accounts, which often surface years after the underlying transactions take place. Nevertheless, the trend reinforces the need for stronger early-warning systems, tighter monitoring of large borrower accounts and enhanced forensic scrutiny of credit exposures.