Banks raise gaurd against financial fraud



* Protect your physical security items like cheque books, letters containing PIN numbers and other confidential data.
* Never share your password and PIN number with any individual.
* Do not click on any invitations or respond to an anonymous web link.
* Ensure you transact through the bank’s official website.
* Most common types of electronic frauds are phishing and skimming.

Rising instances of financial fraud are sending jitters across the banking industry. Individually, every bank is in the process of putting in place systems to prevent and detect fraudulent activity.

At the industry level, the Indian Banks Association (IBA) is setting up a website that will have information of fraud. All member banks of IBA will have access to this information at a fee. Currently, individual banks report instances of fraud to the Reserve Bank of India. However, other banks cannot access the data.

Financial institutions in particular and banks admit that the attempts to execute frauds have risen, but successful frauds, where customers have incurred financial loss, is still very low.

They also claim financial fraud is not a major problem in India, compared to other countries. However, they are quick to add that they cannot ignore the problem completely.

The common instances of fraud that affect the banking sector in India can be classified into two. First one is traditional fraud which occurs due to forged and altered instruments. Second, frauds that occur on electronic channels like credit cards and on-line banking. The first kind of fraud is higher than the second one.

According to a recent KPMG report on India Fraud Survey 2006, fraud risk threat is perceived to be the highest in the financial sector. Within the financial sector, 23% of the respondents believed that banking, insurance, mutual funds and asset management companies are most vulnerable to fraud risk, while 17% believed that non-banking finance companies, investment banks were more vulnerable to fraud risk.

Attempt to conduct fraud is on a rise in India. Customers are increasingly becoming vigilant and as a result, the number of on-line frauds, especially phishing attempts can be tracked, said the Senior General Manager, ICICI Bank

He also said that as a measure to check fraud in credit cards, we have an intellectual model in place, which tracks business transaction and informs customers through SMS alerts of a transaction over a threshold limit. On the online banking channel we have strict security systems to authenticate passwords and also have a dual authentication system.

HSBC has also pulled up its socks to counter frau. The bank has sent an electronic gizmo to all its customers using internet banking. This gizmo generates a random six digit number every time the customer wants to access his account or conduct transactions online.