This document summarizes the Indian Ministry of Finance's response to Lok Sabha Unstarred Question No. 111, addressed on July 21, 2025, regarding the increase in bank frauds. Contrary to the question's premise, the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, stated that data from the Reserve Bank of India (RBI) indicates a decline in the number of fraud cases. For the fiscal year 2023-24, there were 322,473 reported fraud cases, while for the fiscal year 2024-25, the number decreased to 125,293, representing a year-on-year decline of 61.15%.
The response also outlines measures taken to strengthen customer onboarding and transaction monitoring systems. The RBI's Master Direction on Know Your Customer (KYC) mandates that all Regulated Entities (REs), including banks, implement Board-approved KYC policies covering customer onboarding and transaction monitoring. REs are required to have software capable of generating alerts for transactions inconsistent with customer risk profiles. Compliance with these regulations is continuously monitored by the RBI.
Furthermore, banks are mandated to have robust internal audit and controls, Early Warning Signals (EWS) and Red Flagging of Accounts (RFA) systems, timely reporting to Law Enforcement Agencies (LEAs), and Data Analytics and Market Intelligence Units to strengthen risk management. REs are also required to report suspicious transactions and transactions specified under the PML Rules, 2005, to the Financial Intelligence Unit (FIU). The FIU shares this information with national intelligence and law enforcement agencies, national regulatory authorities, and foreign FIUs to combat money laundering and related crimes through effective national, regional, and global networks.
Key Entities Referenced
MINISTRY OF FINANCE: A department of the Government of India responsible for financial matters.
Lok Sabha: The lower house of the Parliament of India, where the question was raised.
SMT. RACHNA BANERJEE: Member of Parliament who raised the question about bank frauds.
SHRI PANKAJ CHAUDHARY: The Minister of State in the Ministry of Finance who provided the answer.
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector.
Know Your Customer KYC: A set of regulations and procedures that banks and financial institutions must follow to verify the identity of their customers.
Financial Intelligence Unit FIU: National agency responsible for receiving, processing, analyzing and disseminating information concerning suspicious financial transactions.
PML Rules, 2005: Rules pertaining to the Prevention of Money Laundering Act in India.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO- 111
ANSWERED ON MONDAY, JULY 21, 2025/ASHADHA 30, 1947 (SAKA)
INCREASE IN BANK FRAUDS
111. SMT. RACHNA BANERJEE
Will the Minister of FINANCE be pleased to state:-
(a) whether the number of bank frauds witnessed a significant increase recording an eightfold
jump during the first half of the current fiscal year;
(b) if so, the details thereof including the number of cases reported by public and private sector
banks and the amount involved, bank-wise; and
(c) the steps taken by the banks to strengthen customer onboarding and transaction monitoring
system including coordination with law enforcement agencies?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) and (b): No. As per Reserve Bank of India (RBI) data on frauds in commercial banks and all
India financial institutions, based on the date of occurrence, the number of fraud cases for the
FY 2023-24 was 3,22,473 whereas for the FY 2024-25, it was 1,25,293. Thus, there is a decline in
number of frauds by 61.15 % on YoY basis.
(c): RBI’s Master Direction on Know Your Customer (KYC) mandates that all Regulated Entities
(REs), including banks to have in place Board-approved KYC Policy, which covers, inter alia,
customer onboarding and transaction monitoring processes. Further, REs have been mandated to
put in place a robust software capable of generating alerts when the transactions are inconsistent
with risk categorization and updated profile of the customers as part of an effective identification
and reporting of suspicious transactions process. Compliance to these regulations is continuously
monitored by RBI. RBI has also mandated the banks to have robust internal audit and controls,
Early Warning Signals (EWS) and Red Flagging of Accounts (RFA), timely reporting to Law
Enforcement Agencies (LEAs), Data Analytics and Market Intelligence Unit for strengthening
risk management systems.
Further, REs are required to report suspicious transactions as well as transactions specified under
the PML Rules, 2005 to the Financial Intelligence Unit (FIU). FIU, in turn, shares such
information with national intelligence / law enforcement agencies, national regulatory authorities
and foreign FIUs. It also coordinates and strengthens collection and sharing of financial
intelligence through an effective national, regional and global network to combat money
laundering and related crimes.
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