Frauds per transaction on the rise since July: RBI DG T Rabi Sankar
Mumbai,Nov 7, 2025
He said that in a truly competitive market, banks might have sought to recover these additional costs from fintechs, but doing so could have slowed the pace of technological adoption.
Frauds per number of transactions, as detected by banks, have been rising since July of the current year after a steady decline since the beginning of the year, said T Rabi Sankar, deputy governor, Reserve Bank of India (RBI), on Friday.
“It’s important to realise that in any system there is some degree of fraud. If you look at frauds per number of transactions, we would see that compared to last year, from the beginning of the year, that incidence kept on reducing substantially until about July, when it again started rising,” Rabi Sankar said while speaking at the SBI Banking and Economics Conclave.
“So they might be cyclical, they might be going up and coming down, but we are hoping that with the digital infrastructure that we are creating, and the success that we are seeing — we are seeing a success rate of more than 90 per cent at this stage — we will be able to contain that,” he added.
Frauds reported by banks declined in FY25 to 23,953, compared to 36,060 in the previous year, though the amount involved jumped to Rs 36,014 crore from Rs 12,230 crore. The increase in the amount involved in total frauds reported during 2024–25 over 2023–24 was mainly due to the removal of fraud classification in 122 cases amounting to Rs 18,674 crore, reported during previous financial years and reclassified afresh during the current financial year after re-examination and ensuring compliance with the Supreme Court judgment dated March 27, 2023.
The deputy governor further said that it can be argued that banks found themselves at an inherent disadvantage compared to fintechs as they operate under a heavier regulatory framework, burdened by compliance requirements such as know your customer (KYC), anti-money laundering (AML), and other supervisory checks, which introduce friction and raise operating costs.
He said that in a truly competitive market, banks might have sought to recover these additional costs from fintechs, but doing so could have slowed the pace of technological adoption.
Yet, even beyond these regulatory disadvantages, the fact remains that banks failed to recognise the transformative potential of the Unified Payments Interface (UPI) as early as fintechs did, he said.
Unlike fintechs, which quickly grasped the value of customer acquisition and data-driven insights, banks were constrained by their conservative structures and legacy mindset. This limitation, rooted in the very nature of traditional banking, prevented them from fully appreciating the opportunities that digital platforms and data offered.
“It also has a disadvantage that banks have to bear the cost of regulation, both financially and in terms of the obligation to follow provincial processes. One corollary of this somewhat protected environment within which banks operate is that the innovation edge is blunted. This is probably one reason why banks did not fully appreciate the potential benefits of UPI as keenly as the fintech players did,” he said.
Further, he highlighted that competitiveness in the financial sector may no longer hinge primarily on balance-sheet strength but rather on data capability and technological agility. Banks, however, remain structurally vulnerable due to their monolithic IT systems, extensive branch networks, and high compliance costs. As a result, mere incremental digitisation will not be enough to keep them competitive.
He said that in this changing landscape, the strategic imperative for banks is clear: they must modernise their core infrastructure, making it more flexible, modular, and adaptive, to effectively compete with the rapidly evolving fintech ecosystem and prepare for the next wave of transformational technologies.
[The Business Standard]
