RBI flags rising graph of digital frauds since July

Reserve Bank Deputy Governor T Rabi Sankar on Friday said the incidence of digital frauds had been rising since July this year.

Speaking at a SBI event here, Sankar said the frauds were going down till July and the Reserve Bank of India (RBI) was checking reasons for the increase since then.

“If you look at frauds per number of transactions, we would see that compared to last year, from the beginning of the year, that incidence (of frauds) kept on reducing substantially until about July when it again started rising up,” he said.

Without sharing the degree of the increase, Sankar said the increase could either be cyclical or seasonal. He said the digital infrastructure was being deployed by the regulator like the mule hunter, which was designed to track down conduit accounts to flush out money received through frauds.

He said banks were structurally vulnerable because of their monolithic IT systems and high fixed costs arising from branch networks and compliance costs, and warned that “incremental digitisation was unlikely” to keep them competitive.

He suggested banks to focus on modernising the core infrastructure to make it less monolithic and rigid in order to compete with the fintech ecosystem.