Cyber fraud victims dissatisfied with banks over delayed action and poor recovery support: study, Pg9

Key Highlights:

• A study, Status of Policing in India Report (SPIR) 2026, by Common Cause and Lokniti, CSDS, reveals widespread dissatisfaction among cyber fraud victims with banks.
• The study, based on a survey of 8,306 respondents across 16 States/U.T.s, found 13% were cybercrime victims, with over half experiencing digital financial fraud.
• Despite prompt reporting by victims (63% within 24 hours), banks are perceived as slow to act and focused on evading accountability.
• Victims and experts allege bank complicity, citing data leaks by insiders and inadequate security systems.
• Reserve Bank of India (RBI) guidelines, including the Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions (2017) and the Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Third Amendment Directions, 2026, outline bank liability, but victims report banks often attribute blame to them.

Detailed Insights:

• The study highlights a significant gap between the RBI's established guidelines on bank liability in cyber fraud and the actual response experienced by victims.
• Banks frequently attribute financial cybercrimes to victim "collaboration" with perpetrators, even in cases where no direct interaction occurred.
• A substantial portion of victims (40% of those who complained to banks) suspect their financial data was compromised by bank insiders.
• Cybercrime experts and police officers corroborate the perception of bank complicity and highlight inadequate data security systems as a major concern.
• Banks are criticized for insufficient due diligence in opening accounts, which are often exploited as mule accounts by fraudsters.
• Overall satisfaction with banks for money recovery was low, with over 20% "very dissatisfied" and 16% "somewhat dissatisfied," irrespective of public or private sector banks.
• The Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Third Amendment Directions, 2026, aim to broaden protection to cases where customers are tricked into payments and introduce a compensation mechanism for small-value frauds.
• The 2017 RBI circular mandates zero liability for customers in cases of bank negligence or third-party breaches if reported within three working days.

Key Concepts Involved:

• Cybercrime: Criminal activities conducted via computer networks or the internet, often involving financial fraud or data theft.
• Mule Accounts: Bank accounts used by criminals to receive and transfer illegally obtained money, often opened using false identities or by unsuspecting individuals.
• KYC (Know Your Customer): A process by which banks verify the identity of their clients to prevent money laundering, terrorist financing, and other illegal activities.
• RBI Guidelines on Customer Liability: Directives issued by the Reserve Bank of India defining the extent of customer and bank responsibility in cases of unauthorized electronic banking transactions.