The RBI’s annual report has a separate section on bank frauds. Data from the recently released annual report for 2020-21 indicates that the total amount in reported cases of bank fraud increased by over three times in the four years between 2017-18 and 2020-21. Here is analysis of the trends. Bank fraud is considered a federal crime in many countries as it involves fraudulent activities to wrongfully gain property or money from a federally insured financial institution. There have been umpteen cases of money misappropriated in bank frauds in the country even to the tune of 100s of crores. Though the Reserve Bank of India (RBI) does not have a standardized definition for fraud, Section 17 of the Indian Contract Act, in contractual terms, suggests that fraud means and includes any of the acts by a party to a contract or with his connivance or by his agents with the intention to deceive another party or his agent or to induce him to enter into a contract. In simpler terms, it is a dishonest act or behaviour by which a person gains an advantage over another. This can be the concealment of facts, false claims, promises without the intention to carry it out, or any deceptive act. RBI has classified fraud into mainly six categories Every year, a significant number of bank fraud cases are reported in India. According to RBI’s Master Circular on ‘Frauds – Classification and Reporting‘, frauds have been classified as misappropriation and criminal breach of trust, encashment through forged instruments, manipulation of books of account, an extension of unauthorized credit facilities for reward or for illegal gratification, cash shortage, cheating and forgery, and fraudulent transactions involving foreign exchange. Bank fraud can be an act of insiders or others. The RBI has a dedicated section on fraud analysis in its annual report, which is a statutory report of its Central Board of Directors. In the latest 2020-21 annual report, the working and functions of the RBI for the transition period of nine months (July 2020 – March 2021) have been covered, following the decision in 2020 to change its accounting year from July-June to April-March cycle to align its financial year with that of the government. In its annual report, the RBI data on frauds corresponds to frauds of Rs 1 lakh and above only. More than 28,000 cases of bank fraud have been reported in the last four years Data from 2017-18 to 2020-21 reveals that the total number of bank frauds involving a minimum of Rs. 1 Lakh went up from 5,916 in 2017-18 to 8,703 in 2019-20, and then dropped to 7,363 in 2020-21. In other words, the number of reported cases of fraud went up by 47% in three years between 2017-18 and 2019-20 and then dropped by 15% in the pandemic year, 2020-21. A total of 28,780 cases of bank fraud involving at least Rs. 1 lakh have been reported in the last four years. It should be remembered that the data for 2020-21 is only for a period of 9 months, unlike the other years. Furthermore, the statistics pertaining to the number of cases reported in a particular year though the fraudulent activity could have taken place earlier. Private sector banks account for 50% of fraud cases in 2020-21, overtaking the share of PSBs Until 2019-20, the majority of the frauds, about one-half, were reported in public sector banks and the private sector banks accounted for around one-third of all the frauds reported across all bank groups. However, the share of frauds in public sector banks of the total frauds in the system decreased in 2020-21 while that of private sector banks increased. In 2020-21, public sector banks accounted for 39% of the fraud cases reported while private sector banks accounted for more than 50%. Meanwhile, the share of foreign banks, which accounted for the third-highest number of bank frauds, has reduced from 16.5% in 2017-18 to 7.1% in 2020-21. There has been an increase in the number of frauds reported in payments banks from just 3 in 2017-18 around the time when payments banks were introduced in India, to 88 in 2020-21. There has not been a significant change in the numbers reported by other bank groups such as financial institutions, small finance banks, and local area banks. According to a report in The Hindu in December 2020, the Central Bureau of Investigation had registered about 190 cases of bank fraud in 2020 alone, involving alleged misappropriation of close to ₹ 60,000 crores. In about a dozen cases, the companies and their top functionaries were accused of cheating the banks of more than ₹ 1,000 crores each, stated the report. Rs. 4.37 lakh crores involved in bank frauds in four years In terms of the amount involved in frauds, the total amount witnessed a more than a four-fold increase from Rs. 41,167 crores in 2017-18 to Rs.