Reserve Bank Deputy Governor T Rabi Sankar has raised concerns over a recent surge in digital fraud cases. He revealed that while such frauds were declining earlier, they have started rising again since July this year. Speaking at an SBI event, Sankar said the RBI is now looking into what caused this sudden increase and how it can be controlled, reported PTI.

He explained that the rate of frauds had been improving earlier this year but began increasing again mid-year. “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 (of frauds) kept on reducing substantially until about July when it again started rising up,” he said.

Sankar did not specify how big the rise in frauds was, but said it could be due to seasonal or cyclical factors. He added that the RBI has already put systems in place, such as the ‘mule hunter’ tool, which helps track down fake or proxy bank accounts used to move money collected through fraud.

He said banks were structurally vulnerable because of their monolithic IT systems and high fixed costs arising from branch networks and compliance costs, and warned that “incremental digitisation was unlikely” to keep them competitive. He suggested banks to focus on modernising the core infrastructure to make it less monolithic and rigid in order to compete with the fintech ecosystem.