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"Around 93 per cent of the respondents pointed out a substantial rise in fraud incidents, with more than half of the respondents having witnessed more than a 10 per cent increase (in fraud incidents) within their respective institutions," the report said.
The 'Deloitte India Banking Fraud Survey Report Edition II' was based on the survey of 44 public, private and foreign banks.
The report added that banks also witnessed a rise in the level of sophistication with which the frauds were executed.
"Retail banking was identified as major contributor to fraud incidents, with a majority of respondents indicating that they had experienced more than 50 fraud incidents in the retail banking segment in the last two years, with an average fraud loss of around Rs 10 lakh per incident," it said.
However, the non-retail segment saw an average of 10 fraud incidents with an approximate loss of Rs 2 crore per incident, it added.
According to the report, some of the reasons that have been identified for the increase in fraud incidents include lack of oversight by line managers or senior management on deviations from existing processes, business pressures to meet unreasonable targets, lack of tools to identify potential red flags, and collusion between employees and external parties.
The common causes of frauds observed in corporate banking included diversion and siphoning of funds, whereas fraudulent documentation and absence/over-valuation of collateral were cited as the main reasons for fraud in retail banking, it said.