Over the last few years, India has been one of the worlds fastest growing economies with

banking and financial services companies experiencing significant growth both in size and profitability. In the last decade, the Indian banking sector grew at an average of 18 percent compared to over 7 percent GDP growth. So frauds in the financial services industry pose a significant risk to institutions, as well as to the integrity of capital markets. Its effect can be widespread, causing long term financial and reputational damage.

336 million debit cards, 19 million credit cards, 1,20,000 ATMs, nearly 9,00,000 POS terminals, 18 prepaid service providers authorized by RBI, transaction level of 45 million debit card transactions for Rs 7,000crores in value per month and 31 million credit cards transactions for Rs 12,000 crore in value per month shows that the card payment industry is no longer small as it used to be 5 years back.

bank is typically exposed to different types of frauds.

APPLICATION FRAUD LOST/ STOLEN CARDS ACCOUNT TAKEOVER

 Erasing the magnetic strip Creating a fake card Altering card details Skimming White plastic

MERCHANT COLLUSION TRIANGULATION

INTERNET RELATED FRAUDS: Site cloning False merchant sites Credit card generators

The most observations state lack of oversight by line managers or senior managers on deviations from existing process/controls. One of the major reasons followed by current business pressure to meet targets and difficult business scenario as other two major reasons for increasing fraud incidents.

It appears that a majority of the incidents are still detected through a formal and informal complaint mechanism.
Technology appears to be gaining prominence in fraud detection. Many of the respondents indicated that they detected fraud using a fraud detection/analytics tool. Time for detection of fraud: According to secondary information, the average time taken to discover a fraud incident is more than six months and discovery of some of them took greater than a year.

The details furnished by Reserve Bank of India (RBI) in respect of Scheduled Commercial Banks pertaining to frauds relating to ATMs/Debit Cards/ Internet Banking and Credit Cards is as under :

16000 14000 12000 10000 8000 6000 No. of Cases Amount (Rs in Lakhs)

4000
2000 0 2010 2011 2012

Frauds are an inseparable part of any business. And so Banks too will have to deal with frauds no matter what level of security and scrutiny they build in. This is further complicated by the fact that fraudsters keep devising newer techniques of executing financial frauds. This requires banks to invest in state-of-theart IT systems to monitor, detect, block, investigate, analyze and prevent fraudulent transactions. Complicated models need to be developed which are capable of identifying fraud transactions by assigning it a fraud risk score.