Common Types of Banking Frauds in India


The COVID-19-induced lockdowns have increased the popularity of digital modes of payment due to their simplicity and customer benefit. However, it also caused a lot of fraudsters to take advantage of the gaps and dupe customers in different ways. In response to business uncertainty, fraud land financial crime across the globe is expected to rise in response to the risks associated with the fraud.

It is important to note that these changes have enhanced the banking sector’s efficiency and productivity tremendously. However, the amount of money lost to bank fraud in India is increasing, even as the country's banking sector continues to grow in terms of revenue and profits.

This unfavorable trend in the financial system results not just in losses for banks, but also in a decline in their trust. This article will give you an idea about Comment types of banking fraud in India that you should be aware of.

Banking Frauds By Insider

Following are the methods used by fraudsters inside the banks to steal money from their customers using their account, ID or transaction details:

Transaction reversal

The amount you deposit in the bank has all the eyes to seize. Anyone from the staff can reverse your transactions and loot your money. This type of fraud is usually targeted at juvenile or elder savings accounts where the account holders barely check transactions. 

Secret charges

Bank employees might levy charges like extra interest on personal loans or even spike up your credit limits. This is a classic form of stealing from the profits without bringing it to the bank's notice.

Journal entry fraud

In this case, an employee set up a dummy company profile pretending as a bank vendor. He then debits entries under that fake vendor's name and the payable amount is availed by the culprit

Loan Frauds

An employer borrows a loan using a stolen customer ID as he has access to confidential. The actual borrower remains undetected and it leads to heavy loss for the bank as they can't recover the sum from the customer. In such cases, employees borrow loans using stolen customer IDs.  

Data theft

Bank stores customer data such as PIN and other details that can be misused for personal gains. Internal people having access to this data can sell it in the market. Since banks handle such sensitive data regularly, they must add an extra layer to cybersecurity.

Banking Fraud by outside people

These are the techniques fraudsters use to steal money from bank accounts using ID proofs, account or transaction details:

Card skimming

Card skimming is an illegal process of duplicating card information by skimming devices. This device is usually installed in the POS machine or ATM for extracting the data from ATM, debit, or credit cards and to create a duplicate card. 

Further, as scammers cannot withdraw cash without the pin, they use the card to make contactless payments through the card. Additionally, some merchants abuse customer bank information by stealing copies of the credentials while they make a card payment.

Once the threat is recognized one should replace their magnetic plastic card with a chip-based card.

Know more about credit card frauds in India


Vishing occurs when a fraudster attempts to take confidential information from you over the phone, such as your user ID and password, one-time password, URN, Card PIN, CVV, or date of birth. Imposters pose as bankers, insurance agents, and government officials and approach customers via phone or social media.

Imposters trick customers into sharing information such as passwords, PINs, and CVVs by citing an emergency or by disclosing certain consumer facts.

Scam through QR code scan

Fraudsters often use ruses to persuade customers to scan QR codes using apps on their phones with the objective of extorting them. Using false information, fraudsters can also approach users and slowly gain their trust, then redirect them to a page where they steal their data or money.

In-person fraud

This type of fraud is usually perpetrated by watching over the shoulder of the target using an ATM or distraction tactics, which can cause the scammer to gain access to their bank card and PIN.

Like skimming, scammers sometimes engage their target in conversation to learn more identifying information about them. PINs and other information can be added to the card to expand its uses, including face-to-face retail shopping.

CEO fraud 

Fraudsters impersonate a senior manager or CEO to pressure employees into making payments through CEO fraud, also called Business Email Compromise (BEC) or whale phishing.

An email sent by a senior member of staff, appearing to be from a CEO, is the usual method of CEO fraud. It involves requesting an urgent payment to a partner or supplier through emails.

ATM Skimming

A skimming device is installed in ATM machines by fraudsters who use it to steal customer information. An RBI release notes that sometimes, fraudsters pretending to be other ATM customers standing nearby can access a customer's PIN when they enter it into an ATM machine. They then use it to create a duplicate card and withdraw money from the customer’s account.

Frauds due to the use of unverified mobile apps

It was reported by RBI that fraudsters circulated app links, masked to appear as if they were authorized apps, through SMS, email, social media, instant messaging, etc. These scammers trick customers into clicking on links that download unverified applications onto their mobile phones, laptops, and desktops.


Phishing is an online scam faced by banks worldwide. In phishing, "phishers" try to obtain customer account information such as user names, passwords, PINs, or Social Security numbers. The fraudster creates a phishing website that appears to be from a known institution, such as a bank, popular e-commerce website, search engine, government agency, etc. With these deceptive communications, fraudsters spread links to various websites by SMS, social media, email, Instant Messenger, etc., and gain your personal information.

Frauds through search engines

Customers use search engines to find contact information for their bank, Aadhaar center, etc. These search engine results are frequently modified by the scammers to appear as if they belong to the entity of the scammers.

Customers end up contacting such unverified contact numbers displayed as contact details of the bank on search engines. Once the customers contact them, the imposters ask the customers to share their card credentials for verification. Assuming it to be genuine, the customers share their security details and thus fall prey to fraud.

You Might be Intrested in: