homefinance NewsKotak Bank cites variance in fraud reporting by other lenders, seeks better regulations
Kotak Bank cites variance in fraud reporting by other lenders, seeks better regulations
Compared to Kotak, its peers in the private sector reported far lower cases. For instance, ICICI Bank reported 436 cases of fraud during the period, followed by HDFC Bank (303), Indusind Bank (200), and Axis Bank (195). RBL Bank reported 150 cases of fraud during the first quarter of FY2022-23, according to RBI.
Kotak Mahindra Bank has alleged inconsistent reporting of frauds by banks to the regulator, days after reports suggested that the Uday Kotak-led lender reported a significantly higher number of frauds compared to other banks.
In a statement released on Tuesday morning, Kotak Mahindra Bank said, “the news reports on bank frauds that appeared recently are comparing apples to oranges,” adding that it had “observed that there is significant variance in what is chosen to be reported to the regulator by other banks.”
The statement refers to recent data on the total frauds reported by banks in the April-June quarter of the current financial year. In a recent reply in Parliament, a Finance Ministry official shared data compiled by the Reserve Bank of India on total number of frauds reported, which showed that Kotak Mahindra Bank recorded a significant 5,278 cases of fraud in the first quarter of the current financial year (2022-23), compared to single-digit fraud instances reported by larger public sector banks.
Compared to Kotak, its peers in the private sector reported far lower cases. For instance, ICICI Bank reported 436 cases of fraud during the period, followed by HDFC Bank (303), Indusind Bank (200), and Axis Bank (195). RBL Bank reported 150 cases of fraud during the first quarter of FY2022-23, according to RBI.
In stark contrast, the country's largest lender State Bank of India (SBI) reported only nine fraud cases during the same period.
Number Of Frauds Reported by Banks (Q1 FY23)
| Banks | Reported frauds |
| Kotak Mahindra Bank | 5,278 |
| ICICI Bank | 436 |
| HDFC Bank | 303 |
| IndusInd Bank | 200 |
| Axis Bank | 195 |
| RBL Bank | 150 |
| IDBI Bank | 144 |
| South Indian Bank | 43 |
| IOB | 31 |
| Central Bank of India | 19 |
| Federal Bank | 11 |
| SBI | 9 |
| CSB Bank | 9 |
| PNB | 8 |
| Bank of Baroda | 5 |
| Bandhan Bank | 3 |
| Indian Bank | 3 |
| Bank of India | 2 |
| Bank of Maharashtra | 2 |
| City Union Bank | 1 |
| IDFC First Bank | 1 |
| UCO Bank | 1 |
| Punjab $ Sind Bank | 1 |
(Data Source: RBI)
The nature of frauds, and quantum of amount involved in these cases of frauds was not specified in the data.
To explain this huge differential, Kotak Mahindra Bank said in its statement, “The total number of frauds reported by Kotak Mahindra Bank (Kotak), in line with regulatory requirements, also include instances of skimming, phishing, vishing, Ecommerce frauds, across debit cards, credit cards, UPI, mobile banking, internet banking, payment gateways etc. regardless of whether customers and / or the bank faced losses, or whether the fraud amounts were recovered eventually.”
ALSO READ | All points mentioned by RBI satisfactorily addressed: City Union Bank on inspection report
It added, “For the period reported, of the 5,278 instances for Kotak, 97 percent are digital and card related frauds that occurred due to customers unwittingly compromising their credentials by clicking on unknown links, or giving access to their devices or sharing their credentials with unscrupulous individuals willingly.”
“Other banks do not appear to be exhaustively or uniformly reporting these types of frauds. Such frauds are not a reflection of any vulnerabilities in the bank’s secure infrastructure and systems,” Kotak Mahindra Bank said.
Kotak Bank has raised this concern with the regulator, Reserve Bank of India, via letters to them dated March 17, 2022 and August 30, 2022 to enforce standardisation in reporting requirements, it said.
The bank said it has seen a steady downward trend year-on-year (27%) in such digital fraud transactions reported by customers while customer acquisition and digital transactions are increasing exponentially.
RBI data also seems to suggest that the number of instances of frauds via cards and digital means are also higher in number, compared to frauds via loans and advances. As per the RBI data , issues relating to ATM/debit cards , mobile and electronic banking and credit cards formed the single largest block of complaints at over 39 percent of the total number of complaints received in FY22, while issues relating to loans and advances by banks formed the second largest chunk at 28 percent.
This could explain why the overall number of frauds would be higher when digital frauds are included. Kotak Bank’s allegations seem to suggest such digital frauds are not being reported by other banks, making its own numbers look disproportionately higher.
(Edited by : Anshul)
First Published: Aug 30, 2022 1:49 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Phase five Lok Sabha polls: Rae Bareli, Amethi among 14 UP seats going to polls on Monday
May 19, 2024 1:03 PM
AAP protest walk: Arvind Kejriwal challenges BJP to arrest entire party, Delhi Police imposes Section 144
May 19, 2024 12:26 PM
Terror attacks in Kashmir raise concerns ahead of May 20 and May 25 election
May 19, 2024 12:15 PM