Types of Bank Fraud in India that Customers should be Aware of.

Bank Fraud

A professional banking system is necessary for every country’s economic success, and although the banking sector is now booming, it is encountering operational challenges such as banking fraud. With a variety of economic factors at play, the banking sector’s role has developed and has been at the forefront of fraud mitigation techniques, prescribing the frameworks that banks must use in order to have a better understanding of fraud risks.

Nonetheless, the amount of money lost as a result of fraud is growing, and the amount misused in these crimes is in the millions and crores of rupees. Both the Reserve Bank of India and bank management are worried about banking customers and are working to educate them about digital payment-related fraud. For this purpose, the RBI has issued a brochure that sheds light on such scammers.

In this article, we will discuss the types of bank fraud in India that customers should be aware of.

Here’s a look at some of the types of bank fraud in India that customers should be aware of.

Types of bank fraud in India that customers should be aware of.

Digital payment methods attracted attention during the COVID-19-induced lockdowns since they ease financial transactions and digital payments. Customers have benefited from digital payments, but this spectacular growth has also resulted in a significant increase in the number of fraudsters, creating new ways to find loopholes and scam innocent citizens. Dealing with fraud threats is not on any bank’s wish list, but it is a fact that fraud is a considerable financial crime throughout the world and is expected to grow as the business environment becomes more uncertain.

Here is a list of the types of bank fraud in India that customers should be aware of:


Phishing is an online fraud that is one of the most severe international issues confronting banks globally. It is a phishing attempt in which “phishers” get client account details such as user names, credentials, PINs, or Social Security numbers.

Fraudsters set up a phishing website with pop-ups or URLs that look to be from well-known organizations such as banks, famous e-commerce sites, search engines, government offices, and so on. In fraudulent communications, fraudsters send links to various websites through SMS, social media, email, instant messenger, and so on, and steal your personal information.


Vishing is another term for voice phishing. In this scam, scammers act as representatives of a reputable banking organization and request personal banking information from you. They steal your money from your bank account after getting your personal banking details.

Fraudsters pretending to be bank officials call and say that their credit or debit card account is about to expire and must be replaced as soon as possible to avoid it being blocked. They further promise that they will assist you in renewing your account, and you will be requested to provide sensitive information such as your CVV number and OTP.

If you provide your CVV and OTP, money will be unlawfully transferred from your bank account. Online fraudsters will persuade you by speaking in the manner of professional bank employees. Remember that banks will never ask you for personal information over the phone.

Card skimming

Card skimming is a type of perpetrator activity or bank fraud in which the offender uses skimming devices to collect credit card information. This skimmer is often implanted in a POS machine or ATM to gather personal data from ATM, debit, or credit cards, which is then used to make a duplicate card to withdraw money from a customer’s account via an ATM or merchant site.

Since the electronic gadget gathers and retains essential information from the magnetic strip of your credit/debit card, it’s best to replace your magnetic plastic card with a chip-based card after you’ve identified the threat.

Theft of identity

Identity theft is a type of scam in which someone gets another person’s sensitive, crucial, and essential information, generally personal or banking information such as your SSN or bank account number, and then uses this information to engage in any illegal activity. Identity theft protection is a developing business, and victims are often left with credit, financial, and reputational harm.

Social media impersonation

With so many individuals spending time on social media and updating their information, scammers can easily access this information and use it to swindle customers. When a person impersonates another person on social media platforms by creating a fake profile, they use social engineering to target individuals by sending requests to the users’ friends in order to get money and other private information.

Fraudulent loans

Fraudsters steal money from banks under the cover of loans. Banks will always provide loans if they feel the money will be returned with interest. A customer in the event of a fraudulent loan is a business entity managed by a corrupt bank official or a collaborator. The borrower files bankruptcy after taking out a loan, and the debt is not returned. In rare circumstances, the borrower may be a non-existent entity, and the loan is issued only to steal huge amounts of cash from banks.

Fraud KYC (Know Your Customer)

KYC Fraud is another type of phishing fraud used to get personal information from customers. Fraudsters might claim inadequate KYC documentation, threaten consequences such as account freezing or fines, and take sensitive information such as address proof copies, PAN numbers, Aadhar numbers, OTPs, and so on by impersonating a financial employee. This information is used against the customers in order to obtain access to their bank accounts and steal money. Emails or phone conversations may be used to commit fraud.

It is critical to understand that no bank or government official would ever request sensitive financial information through phone calls or emails.

Swapping SIM cards or cloning SIM cards

In situations such as SIM swap or SIM cloning, “Fraudsters might just possess a duplicate Subscriber Identification Module (SIM) card (including electronic-SIM) for the registered mobile phone number linked to the customer’s bank account by getting access to the customer’s Subscriber Identity Module (SIM) card,” according to the RBI. This is true even if the original Subscriber Identity Module (SIM) card is destroyed.

Criminals commit fraud by performing transactions using the one-time password (OTP) that is received on duplicate SIM cards.

In most cases, fraudulent individuals gain the customer’s personal and identifying information by impersonating a member of the telephone or mobile network staff. They then ask for the customer’s information under the false pretence of making an offer, such as providing a free upgrade of the customer’s SIM card from 3G to 4G or providing additional benefits on the SIM card.

Importance of Background Verification in the Banking Industry

While background checks assist all businesses, banks and financial institutions must get the most latest information on every prospective customer. If you are interested, you can gather background check information on your own. However, not only will it take time and money to gather all of the information you need—which will entail carefully studying court records, criminal records, and national databases—but certain records are not accessible to the public.

By collaborating with a third-party background screening organization, you will be able to quickly get all of the information you want. Working with a reliable background verification agency will save you time and money while also guaranteeing that your customer screening procedure is compliant.

Integritas is aware of the complex levels of transparency and complicated regulations that the financial industry must follow in order to comply with federal, state, and local laws. Integritas provides comprehensive background check services with an emphasis on security to present you with the most trustworthy and up-to-date information.


Banks are the engines that drive the financial industry and an economy’s development. With India’s booming banking industry, bank fraud is on the upswing, and fraudsters are becoming more creative and smart. While it is difficult for financial institutions to function in a fraud-free environment, proactive steps such as vulnerability assessment of operations and regulations may help them to reduce the risk of fraud-related losses. As a consequence, the moment has come to address the banks’ security issues on a priority basis.

Poor recruiting practices and a lack of proper personnel training are major challenges that banks face, as are overburdened employees, inadequate internal control systems, and low compliance levels among bank management, offices, and clerks. Technology, on the other hand, has the potential to assist governments, regulatory organisations, and banks in combating the more sophisticated kind of fraud via proactive forensic data analysis and data mining tools.




Like this article?

Related Posts

Free eBook on
10 Steps in creating a perfect hiring process

This eBook has importance of 10 Steps and 12 important verification you must do before hiring.

Thank you for downloading.

Something went wrong.