The number of banks fraud cases reported in India has been reduced significantly, but value of bank frauds reported has shown a significant increase as per the Annual Report 2025-26 published by the Reserve Bank of India (RBI). The latest data revealed that the fraud scenario has seen significant changes in the last three years, with high value loan/advances frauds seeing a rise to a three-year high of Rs 48,021 crore.
Key Highlights
- Indian banks reported frauds worth Rs 48,021 crore despite a sharp decline in total cases.
- Loan and advances-related frauds dominated banking fraud values, with PSU banks contributing the largest share.
Bank frauds grew by 46.4% year-on-year from Rs 32,803 crore in FY25 to over four times in FY24 (Rs 11,013 crore). In parallel, the number of fraud cases has significantly decreased by 57.4% from 23,722 cases in FY25 to 10,114 cases in FY26.
The overall number of fraud cases has decreased by almost 72% over a two-year period compared to FY24 when 35,800 incidents were recorded. But the rise in the monetary value of frauds indicates that banks are facing fewer, but more serious frauds.
The amount of fraud has consistently risen in the past three years despite a fall in the volume, the RBI stated. The central bank noted that frauds associated with loans and advances became the most prevalent type of fraud in FY26 overshadowing digital payment related frauds, which had been the highest in previous years.
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Loan Frauds Dominate Banking System Losses
Advances (loans, credit facilities etc.) frauds accounted for the major share accounting for nearly Rs 40,774 crore in FY26, representing nearly 85% of the total fraud reported during the year. It was 34.3% higher than the previous fiscal year's level of Rs 30,367 crore and a massive increase from the fiscal year ending in March 2009 when it was Rs 8,917 crore.
The bank fraud cases associated with advances also rose, from 7,924 cases in FY25 to 8,640 cases in FY26. There were 85.5% of all reported fraud cases in the banking system that were related to advances.
Public sector banks remained the most affected segment. State-owned lenders reported frauds worth Rs 35,709 crore during FY26, up 51.2% from Rs 23,617 crore in FY25. PSU banks contributed nearly 75% of the total fraud amount in the banking sector.
The average size of frauds, though, rose significantly as the number of frauds reported by public sector banks fell to 5,418 from 6,916 in the previous year. The private sector banks, on the other hand, reported frauds in the tune of Rs 11,399 crore in the FY26 as compared to 23% rise from the previous year.
Interestingly, digital payment-related frauds witnessed a steep decline both in value and volume. Fraud cases involving cards, internet banking and digital payments dropped to just 293 in FY26 from 13,332 in FY25 and 28,836 in FY24. The amount involved also declined sharply to Rs 29 crore compared to Rs 517 crore last year.
The RBI data indicates that tighter monitoring systems and enhanced digital security measures may have helped reduce retail payment frauds, while vulnerabilities in large credit exposures and loan accounts continue to remain a major challenge for banks.
The RBI report also showed that frauds classified under the “others” category rose significantly to Rs 6,063 crore in FY26 from Rs 971 crore in FY25, increasing their share in total fraud amounts to 12.6%.
The latest figures underscore growing concerns around credit risk management and corporate loan monitoring within the banking sector, even as digital fraud prevention mechanisms appear to be improving steadily.
