Is India world’s bank fraud capital?

■ RBI data reporting Rs 2.2 trillion in losses from 2020–2023 due to bank frauds and inflation-adjusted estimates since independence exceeding Rs 100 trillion.

■ Recent high-profile cases include a Rs 590 crore fraud at IDFC First, a Rs 2,600 crore accounting fraud at IndusInd Bank and an ICICI FD scam of Rs 46 crore

■ Most frauds stem from employee-outsider collusion, phishing, social engineering, system weaknesses, staff shortages, poor training, and improper segregation of duties, with banks often scapegoating a few employees while ignoring deeper institutional failures.

■ India has adequate laws but suffers from extremely slow investigations, rare convictions (typically 7 years or minor fines), and many cases remaining pending indefinitely, in sharp contrast to stricter penalties in countries like the US, China, and Singapore.

Banking and Fraud appear to be going together in many countries and particularly in India. It also appears that the regulators, media, and public are comfortable with short memory on such issues. Probably banks which suffered the fraud incidents, the regulator, the legislative body, and the government are not keen to collect data scientifically and to openly share with public.

As per public sources, data from RBI indicated Rs. 2.2 trillion as fraud amount across public and private sector banks between years 2020 and 2023. Rough estimates indicate that since independence, the inflation adjusted total amount of all bank frauds is more than Rs. 100 trillion.

The notable frauds in last two years include IDFC First bank’s Rs. 590 crs fraud in 2026, ICICI’s FD scam of Rs. 46 crs and IndusInd accounting fraud of Rs. 2,600 crs in 2025. Slightly older ones include Punjab National Bank’s scam of Rs. 14,000 crs in 2018, and Bank of Baroda scam of Rs. 6,000 in 2015.

In most of the bank frauds, the modus operandi are collision of employees with outsiders, phishing, social engineering, bypassing, account takeovers, and synthetic identities. Major reasons are gaps in system, shortage of staff, insufficient time for the employees to ensure all the steps, lack of superiors’ support and guidance, and lack of quality training. In many cases reasons are informal delegations resulting in same person or team attending to maker, checker and passing of transaction.

There may not be any country with zero bank frauds. Finland, Japan, Iceland, Estonia, etc have very few bank frauds and negligible amounts. India, Nigeria, Brazil, Pakistan, and South Africa have many bank fraud cases involving high amounts. Legal regime plays key role in limiting the bank frauds. US imposes 30 years imprisonment and fines. China imposes death penalty. Singapore has 10 + years imprisonment and fines and life ban.

India, Nigeria, Kenya, Pakistan, and Venezuela have adequate laws but strikingly lag in completing the investigations and in enforcing the laws. Most of the cases end with the death of the accused and due to the difficulty to continue investigation eventually holding pending status for the case permanently until the case is totally forgotten.  

Interestingly, India is the only country to have digital arrests. Public sources indicate that India has about 120,000 digital arrest complaints and more than Rs. 1,200 crs seizures every year. In most of the cases the victims are those who have scope to involve in frauds or corruption. This phenomenon indicates the gaps in the system, regulation, and moral values.

Unfortunately, Bank frauds are glamorized in Indian films and the roles are donned by top celebrities. The influence has been instigating the thrill, excitement, and instinct in the youngsters to explore bank frauds. Society has been shameless in failing to expel those with fraud begotten money.

With such an integrated and advanced technological process, it is not possible for any one or few employees to commit such huge frauds. 

System is a culprit to scapegoat few employees, sack them, put them into legal process and proceed as usual until another fraud occurs. In fact, the most impacted are the bank employees answering customers and public despite being not responsible or not aware of complete details of the bank frauds.

Law enforcement in India on bank fraud cases is very long. But final convictions are few which are up to 7 years imprisonment and fines in lakhs. To handle the increasing number and volume of bank frauds, India must establish more agencies like CBI, ED, and Vigilance and recruit more employees. The alternative and better choice is to strictly implement the existing laws to handle already occurred frauds and to prevent future frauds as well. Choice depends on the resolve of the leadership at the helm.

- Dr. Kishore Nuthalapati The author is CFO of  BEKEM Infra Projects Pvt Ltd, Hyderabad