Who is trying to hide Cyber Fraud scam in Indian Banks?

It has been pointed out that the answer given by the Government on the status of Bank frauds in India does not appear to contain correct information. It was pointed out that the figure of frauds for 2009 quoted in the February 22,2013 press release places the frauds at Rs 4048.94 lakhs where as for the same period, reply given to a Parliamentary question on 30.7.2010 stated the fraud value as Rs 16.69 crores.

At the same time we also pointed out that an RTI reply from RBI to DNA Mumbai had placed the frauds in 2006-2011 to be of the order of around Rs 4500 crores just in the top 5 cities of India with Mumbai alone accounting for Rs 1882 crores.

Today a report in TOI  reiterates that Cyber Frauds are around Rs 130 crores in three years based on the PIB release.

It is also known that RBI has earlier been stating that the Fraud reports that it obtains from Banks donot cyber frauds separately. However the PIB press release of 22nd February clearly points out that the figure is for Cyber Frauds. It is not clear how RBI was suddenly able to get these figures.

Also according to the Fraud guidelines all frauds reported in Banks should be reported to the Police by the Banks. According to the PIB release there were 8322 cyber fraud cases in 2012 alone. In 2011 and 2010, the number of frauds were 9588 and 15018 respectively. This means that a total of 32,928 Cyber fraud complaints should have been registered all over India by Banks. These should have reflected as “Cyber Crimes” int he NCRB statistics.

However, NCRB statistics donot show these numbers.

From these various observations it is clear that either the Government is trying to mislead the Parliament and the public about the real status of Cyber fraud incidence in Banks or neither the Government nor RBI is even aware of the actual position.

If RBI and the Government donot know the actual fraud situation, then they it reflects a gross incompetence. If they are aware and are misleading the public, we need to investigate why they are concealing the facts and whether there is any attempt to hide a scam in the Banking industry.

The industry observers estimated the extent of Cyber Frauds in Indian Banks to be way above the figures quoted in the recent reports. The belief is that the frauds are in the region of Rs 6500-8000 crores per annum as against Rs 50 crores now being talked about.

There is therefore a prima facie evidence that there is some thing fishy about the PIB release. There is an apparent motive to suppress the Cyber Fraud situation with vested interests who are promoting disincentivisation of cheques and it is possible that the same people are behind this misinformation.

There needs to be some investigation and a clarification in the Parliament. I wish some MPs such as Rajeev Chandrashekar should take up this matter and seek the clarification from the Finance Ministry.

Naavi

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Government misleading Parliament on Bank fraud information

The PIB press release of 22nd February 2013 has provided some data on Bank frauds. According to this press release the fraud information for the last three years were as follows.

bank_fraud_data_2013

The Bankwise data is also available here

According to these figures which it is presumed must have been given to the Parliament in response to a question, the total frauds reported in 2010 was Rs 4048.94 lakhs.

On 30.7. 2010, the Government in reply to a Loksabha unstarred question no 1072 had stated that the total frauds reported in 2010 was Rs 1669.83 lakhs.

It appears that the Government does not have correct figures and it is misleading the Parliament by giving false information on the status of Bank frauds.

Naavi.org had earlier carried a report of DNA Mumbai which had stated that according to an RTI reply from RBI, Bank frauds in 2006-11 in 5 major cities was of the order of Rs 4500 crores. (See report here). It appears that RBI has no proper information on this key performance parameter of the Banking industry.

Will some MP clarify the position?

Naavi

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Banking frauds in India

RBI has for the first time released some statistics of frauds in the Indian Banks. (Details here) :  (Press Release)

According to the figures released Cyber Frauds in 2012 were about Rs 52.7 crores as against Rs 40.5 cores in 2010. The number of frauds in 2012 is reported to be 8322 as against 15018 in 2010.

The reported value of frauds appear to be far less than what the market had otherwise estimated. It represents the actual frauds reported by Banks and absorbed by them.

According to the PIB release the data excludes frauds which have been treated as NPA. Perhaps it may not also include frauds in which customers have been forced one way or the other to absorb the losses. This also explains the reduction of the number of fraud cases since the losses that have been absorbed by customers would be mostly the frauds of smaller value where they might not have considered it worthwhile to fight it legally.

ICICI Bank is the Bank which leads in the reported fraud cases. Even ICICI Bank is reported to have observed a decline of the fraud numbers which is surprising.

Naavi

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Sec 66A abused again

Kerala Police have joined the bandwagon of Section 66A abusers by booking 111 persons for comments on Facebook. This is in respect of a Facebook comment made by one person and shared by other 110 persons regarding Mr P.J.Kurien who has been accused in a rape case at Suryanelli.

It is stated that the comment was shared by over 2000 and the logic of booking case against the chosen 111 is not known.

The complaint was made by the Kerala Mahila Congress Chief, Mrs Bindu Krishna. The complainant who is herself a women has stated that the comments made were obscene which “no woman could tolerate”. It is interesting to note that Bindu Krishna considers that perhaps the rape itself was something that could be tolerated and not the comments against the Congress leader!

The evidence against the Facebook users is that they have “Shared” the comment which is obscene. On the other hand the evidence against Mr Kurien is the statement of the victim herself. Police need to consider whether this evidence is strong enough to consider booking the case against Mr Kurien and proceding against him rather than proceeding against Facebook users.

Kerala Police are considered well informed when it comes to Cyber Laws but it appears that even they act more under political influence rather than logic or public interest. It is however good that Police have not jumped to arresting the Facebook users and have stopped only at booking cases.

In our opinion Sec 66A of ITA 2008 is not meant to be applied to Facebook postings and more such misapplications will only strengthen the demand for its removal from the statute.

Naavi

Related Story in TOI

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ICICI Bank Credit Card fraud surfaces at Mysore

A serious credit card fraud has been reported from Mysore where a holder of ICICI Bank credit card has found that nearly RS 1 lakh has been debited to his credit card account on account of an airline ticket purchase abroad.

While ICICI Bank is expected to absorb the loss without much fuss, the incident highlights the risks in Credit card usage. Coming at a time when RBI is trying to push public into using more of credit cards and Internet Banking through its policy for disincentivisation of cheques (See earlier articles on this subject on this site) it is a reminder to public about what is in store for them if banks are not serious about security.

In the instant case, the Bank ought to have installed a “Risk Management Software” which all reputed payment gateways normally use which should have flagged the transaction as “Unusual” and quarantined it. The fact that this has not happened indicates that there is a serious flaw in the security systems in the Bank, the responsibility for which lies squarely with the heads of the card division and IT as well as the top management including the CMD who has failed to institute the necessary policies for securing credit card transactions.

The other possibility is that there could be an involvement of some employees of the Bank who might have been either grossly negligent or have actively abetted the crime.

There is also a possibility of the card having been cloned in one of the places where it has been previously used.

As a precaution, ICICI Bank needs to withdraw and replace cards of all customers in the local area so that if they have accidentally visited the same merchant establishment where the cloning might have taken place, more such frauds will surface in the coming days from Mysore.

Naavi

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Mysore Grahak Parishat takes up Cheque disincentivisation issue

Mysore Grahak Parishat, the active consumer organization in Mysore is trying to create awareness of the impact of the RBI discussion paper on Disincentivisation of Cheques. A press release has recently been  issued by the organisation in this regard.

A related report in Star of Mysore is available here.

A related report in inmysore.com

Compendium of Previous Articles: : Why this Kolaveri

Naavi

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