Evolving Patterns of Banking Fraud in India

Financial fraud is a continuous threat to the stability and credibility of the Indian banking system. However, despite the substantial amount of regulatory reporting generated by the RBI, relatively few peer-reviewed studies have systematically examined the long-term temporal patterns in these fraud statistics using formal distribution-free inferential methods. Most research studies remains primarily descriptive in nature. This paper fills that gap by analyzing trends in banking frauds reported by Scheduled Commercial Banks (SCBs) in India for a period of nine financial years (2016-17 to 2024-25) using data published only in RBI Annual Reports. We test two one-sided hypotheses: (i) existence of a statistically significant monotonic trend in the annual number of reported cases of frauds and (ii) existence of a statistically significant monotonic trend in the annual monetary value of frauds. Both hypotheses tested with non-parametric rank correlation statistic, Kendall’s Tau (τ), validated with SPSS software. Descriptive statistics and a robustness check (without the one provisional terminal-year observation) are provided. The result rejects the null hypothesis for Hypothesis A, indicating a statistically significant positive trend in the number of frauds (τ = 0.889, p = 0.000, one-tailed). Hypothesis B shows a negative trend (τ = -0.167) in monetary amounts but it is not statistically significant (p = 0.266, one-tailed) and the null hypothesis is not rejected. Taken together, the results recommend a structural shift in Indian banking fraud, from low-frequency, high-value fraud in the loan portfolio to high-frequency, low-value fraud in digital payments. The study interprets these findings in the light of the Fraud Triangle and the Routine Activity Theory and discusses implications for the regulatory architecture, supervisory technology and bank governance.

Banking Fraud; Kendall's Tau; RBI Annual Report; Trend Analysis; Financial Fraud

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