Digital financial frauds in India reached alarming levels in the first 10 months (April–January) of FY25, with the total amount involved rising to Rs 4,245 crore across 2.4 million incidents, according to data tabled by the Ministry of Finance in the Rajya Sabha. This marks a 67% increase from the Rs 2,537 crore reported in FY23, which saw 2 million fraud cases. In FY24, financial frauds amounted to Rs 4,403 crore across 2.8 million cases, highlighting the persistent rise in digital fraud despite preventive measures.
The consistent increase in fraud-related losses over the past three financial years indicates growing vulnerabilities in digital financial ecosystems. While the number of fraud cases increased by 20% between FY23 and FY24, the monetary value of frauds grew even more significantly. In FY25, although the total number of cases declined marginally from FY24 levels, the amount involved remains close to the previous year’s high, reflecting increased sophistication and scale in digital financial frauds.
The safeguards
To address this growing challenge, the Reserve Bank of India (RBI) has implemented the Central Payments Fraud Information Registry, a web-based system where banks, non-bank prepaid payment instrument issuers, and non-bank credit card issuers are required to report payment-related frauds. This centralised system aims to enhance monitoring and facilitate quicker detection of suspicious transactions.
In parallel, the government has introduced the Citizen Financial Cyberfraud Reporting and Management System, which enables immediate reporting of financial frauds and aims to prevent fraudsters from transferring funds. This system has proved effective, with approximately Rs 4,386 crore saved across 1.3 million complaints so far. By facilitating real-time reporting and coordination between law enforcement agencies and financial institutions, the system has significantly reduced potential losses to victims of digital financial frauds.
The RBI has taken steps to strengthen digital payment security through its Master Directions on Digital Payment Security Controls, issued in February 2021. These guidelines mandate that banks and financial institutions implement minimum security standards across various payment channels, including internet banking, mobile banking, and card payments. The directives focus on protecting customer data, preventing unauthorised access, and minimising cyber threats through robust security frameworks.
To further enhance fraud detection, the RBI has launched MuleHunter.AI, an artificial intelligence (AI)-based tool designed to identify money mules involved in fraudulent transactions.
