Digital banking increased incidents of financial frauds, say PSBs

The landscape of financial transactions in India has been transformed over the last couple of years as the leap from manual to digital system has been made successfully. However, this change has also caused incidents of financial frauds to rise. The effect has been so negative that the Public sector banks (PSBs) have even gone to the extent of informing the Parliamentary panel on finance about it. Sources close to the development have informed Zee Business's Prakash Priyadarshi that banks have informed the Parliamentary panel that cyber attack incidents have risen and led to an increase in fraudulent transactions. The information was passed on to the panel during a recently concluded meet. 

It said that the banking system is under constant attack by organised gangs. FSR said that cyber attacks are the biggest threat to the Indian banking sector, they said. The panel was also informed that maximum financial frauds are committed by big borrowers who use technical loopholes in the banking system to commit such fraud. In addition, the banks also informed the panel that the number of financial frauds, as well as amounts involved, have gone up. 

RBI data suggests that banking fraud has increased by a staggering 19.4 per cent in the last five years.

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However, not all was doom and gloom in the sector. Banks have also told the panel that the technical gap, which was being used in financial frauds, has now been replaced by advanced technology. The use of this technology will assist banks in identifying fraud attempts being made in the system faster. The existing flaws were removed in accordance with the instructions from the RBI and the government, they averred.