Bank frauds touched a three-year high in monetary terms in FY26, with the total amount involved surging 46 per cent to ₹48,021 crore from ₹32,803 crore in FY25, even as the number of fraud cases dropped sharply to a multi-year low of 10,114 incidents, according to the Reserve Bank of India (RBI) annual report.

The divergent trend highlights a significant shift in the nature of frauds in the banking system — fewer incidents but involving substantially larger sums.

Public sector banks (PSBs) continued to bear the brunt of the losses. Fraud amounts at PSBs rose to ₹35,709 crore in FY26, accounting for nearly three-fourths of the industry total, despite these lenders reporting 5,418 cases, or 53.6 per cent of all fraud incidents.

The average fraud value at PSBs worked out to around ₹6.6 crore per case, considerably higher than peers, underlining their continued vulnerability to large-ticket corporate and credit-related frauds.

While the share of PSBs in overall fraud cases has been declining, their share in the total value involved increased to 74.5 per cent in FY26 from 72 per cent in the previous year.

Private sector banks, which had accounted for nearly 24,000 fraud cases in FY24 or 67 per cent of the industry total, witnessed a sharp moderation in volumes over the last two years.

Fraud cases at private banks fell to 3,956 in FY26, while the total amount involved stood at ₹11,399 crore, representing 23.7 per cent of the industry-wide fraud value.

Industry sources attributed the steep fall in fraud volumes at private lenders to tighter digital fraud controls, enhanced surveillance systems and improved real-time transaction monitoring. However, they cautioned that the absolute value of frauds remained significant.

Banking industry executives said the trends indicate that while lenders may be gaining ground in curbing high-frequency, low-value retail frauds, vulnerabilities to infrequent but high-value frauds continue to persist.

“The fall in total fraud cases would normally be encouraging. However, the total amount involved has risen sharply, suggesting that large-value fraud risks remain a serious concern,” a senior bank executive said.

Counterfeit notes

RBI said detection of counterfeit currency notes in the banking system rose 5.7 per cent in FY26. The total number of fake notes detected increased to 2,29,746 pieces from 2,17,396 in the previous financial year, led by a sharp rise in counterfeit ₹500 and ₹20 notes.

RBI also said that it is exploring a ‘kill switch’ for debit transactions to prevent any potential digital fraud, if the customer suspects it.

“The introduction of a switch-on and switch-off facility for all digital payment modes shall be explored along with a ‘kill switch’ to block all debits from the account in one stroke. This facility would help bolster consumer confidence and contribute towards controlling fraud in digital payment transactions,” RBI said.