Fraud cases in India’s public sector banks declined by 79% in number but saw a 58% increase in total value to ₹35,671 crore in FY26, revealing a shift towards more sophisticated scams targeting vulnerable groups.
Public sector banks in India saw the value of frauds linked to them jump 58% to ₹35,671 crore in the year to March 2026, even as the number of reported cases plunged 79% to 5,786, according to a businessline analysis of a reply to an unstarred question in the Rajya Sabha. The figures suggest that while incidents became fewer, the losses were larger. In FY25, banks had reported 27,356 fraud cases worth ₹22,582 crore.
Industry specialists said the pattern reflects a shift towards more targeted and technically elaborate scams. Ramkumar Subramanian, a partner at Grant Thornton Bharat, told businessline that fraud cases fell but the sums involved rose because the methods have become more sophisticated. He pointed to digital arrest scams, which are often aimed at vulnerable groups, including senior citizens, as one example of how criminals seek to extract larger amounts from individual victims.
The trend was not uniform across the state-owned banking system. Indian Overseas Bank recorded a 95% decline in fraud cases, while Central Bank of India and Indian Bank each reported a 91% drop. By contrast, UCO Bank saw a 211% rise in cases, Bank of Maharashtra posted a 36% increase and Union Bank of India recorded a marginal 3% gain. Subramanian said awareness campaigns through interactive voice response systems and digital platforms such as WhatsApp had helped some banks reduce incidents.
Recoveries improved sharply, but they still lagged far behind the sums lost. Banks recovered ₹2,514 crore from fraud-related cases in FY26, more than double the previous year’s figure. Punjab & Sind Bank recovered ₹772 crore, up from ₹0.5 crore in FY25, while Punjab National Bank’s recoveries rose almost sixfold to ₹604 crore and Bank of India’s climbed more than 71-fold to ₹429 crore. Even so, the recovered amount was only a small slice of the total involved.
Subramanian said the gap is partly explained by mule accounts, which are used to obscure the movement of stolen money and make it harder to trace. Madan Sabnavis, chief economist at Bank of Baroda, urged caution in reading too much into the divergence, saying it may simply reflect a smaller number of high-value cases. The government said staff accountability had been fixed in 5,147 cases over the past three financial years, while FIRs were filed in 9,451 borrower-linked fraud cases. It also said the Reserve Bank of India and banks have stepped up prevention through early-warning systems, artificial intelligence tools such as MuleHunter and tighter monitoring of mule accounts.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
