Digital Banking Fraud in India

Updated: Apr 28

In India, we have a significantly old banking industry and the industry has gone through a number of changes after liberalisation. However, the system is well maintained and supervised. But with the evolution in the methods of banking, the birth of several frauds has also been taken place. With the net innovation and development of technology, also the new approaches for ‘Digital Wrongdoings’ have evolved. The inspiration behind these digital frauds is merely the financial profits


What does Cyber Crime mean?

Cyber crime or Digital wrongdoings can be demonstrated as a violation which may include a target, source, a place, instrument, PC or some network which is used as a medium of fraud. As the digital transactions are getting constantly increased, such digital frauds are also going towards advanced levels only.

In the last few years, the digital banking frauds are in full fledged state and India is not any behind.

Along with it, an investigation by Juniper Exploration suggested that by 2019, the expenses of digital banking frauds could be of about 2.1 trillion worldwide. The figures were proved to be true somewhat because such frauds are constantly being raised.


How Cyber Crimes affect Banking sector

The spike in such cases in last few years is because of the upsurge in mobile phones having internet. We can use a number of online banking services in our mobile phones including paying service charges, web saving money, online shopping, or any kind of transactions.

In some cases, if the hackers don’t get enough data, they attack the bank’s system in order to render their endeavours. In addition to the financial benefits, they also make an attempt to trade individual’s data which may include stolen web-based managing account, card numbers, authoritative access to the bank’s servers for exchange of cash and so on. This way, the whole digital wrongdoings affect the whole banking sector.

India has a highest number of Digital Banking Frauds worldwide

India has a higher number of people facing such banking frauds, in comparison to any other country citizens. According to a survey conducted by FIS concluded that about 18% of the Indian citizens have gone through a digital banking fraud in 2017. And, the minister of Information Technology said reported around 26,000 such cases with Indians in the year 2017 which resulted in a total theft of about 1.8 billion rupees.

However, there were just 8% people affected by such frauds in Germany and even lesser which is 6% people reported such frauds in UK.

As the people who majorly use digital banking are of the age group ranging from 27 to 37 years, therefore, 25% of the people in this age group have at least once reported digital banking frauds.

Talking about the positive sides too. Reports suggested an increase in the adoption of online banking by Indian citizens which are even above the age of 53 years. However, it may also increase the risk of digital frauds.

Reserve bank of India has been making attempts in order to limit the liabilities of customers when they face any fraudulent transaction. People can report their banking fraud within three days after such fraud. However, if you knowingly give the required information to some third person then you are not eligible to make such complaints.

With the increasing cases of digital frauds in India, the country has started making some required attempts in this direction. The policemen of India have started being taught about tackling any case of digital frauds. The Karnataka Government, in 2003, instituted a Cyber Crime Cell where 1000 policemen will be enrolled for Cyber Crime Training Programs. Along with it, the Uttar Pradesh and Maharashtra units of Police are actively collaborating with IT experts and data security experts which will eventually help in improving their investigation skills in cases related to digital frauds.


Impacts of Cyber Crime on Society

Even a single successful digital banking fraud can give a lot of implications on the society including financial loss, loss of trust and confidence of consumers, theft of personal information etc. The estimation of financial losses by such digital frauds is of about billions every year. The criminal fraud people by taking the advantage of technology in several ways. Internet gives them an opportunity to be hidden behind the shield of anonymity digitally.

Cyber crimes affect our society in several way which can be offline or online. These are:

  • Identity theft: Being a victim of digital frauds can give a lot of effects on one’s life. Scammers employ phishing which includes sending fake emails and getting their personal information somehow. And, when they give this information to the scammers, they can manage their account using the information.


  • Security Loss: Such criminals attacks business also, whether they are small or large. They take over the servers of that company in order to steal all the information and thus use their system as per their convenience.

  • Monetary Loss: There can be an immense loss from digital frauds. As the people are getting concerned of the traditional assets of attacking their cyber security, criminals are finding advanced ways to steal the money as well as the confidential data.


  • Emotional Impacts: Criminals take advantage of secrecy, anonymity, which is provided to them by internet and make the financial theft from their banks itself. Such incidents may make the people feel traumatised. The studies have shown that the reactions of such cyber crimes generally include a feeling of being annoyed, angry and cheated. In most of the cases, people blame themselves for all this.


Bottom Line

However, people should think that they would mend their behaviour accordingly when they become victim of such crimes. Being aware is the only solution of decreasing these figures. There is a long list of huge scams occurred in India including Vijay Mallya scam, 2G spectrum scam, Nirav Modi PNB Fraud and so on. Being concerned and aware is the only way a common man can stay away from all such things.


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