SBI Cyber Fraud Refunds Surge Nearly 70-Fold as Bank Recoveries Soar Amid Declining Case Count

SBI Cyber Fraud Refunds Surge Nearly 70-Fold as Bank Recoveries Soar Amid Declining Case Count​

Massive Growth in Refund Amounts Reported by State Bank of India​

The government has reported a dramatic increase in the amount refunded to customers affected by cyber fraud at the State Bank of India (SBI). Despite a decline in the number of reported cases, the value of refunds processed by the state-owned bank has risen sharply. This was disclosed by the Ministry of Finance to the Lok Sabha on August 10.

The Minister of State for Finance, Pankaj Chaudhary, stated that SBI refunded ₹12.38 lakh to defrauded customers in FY24. The recovery amount climbed significantly in subsequent years: ₹214.58 lakh was refunded the following year, reaching a high of ₹858.72 lakh in FY26.

The increase in refund payouts is attributed to successful recoveries. Funds are being recovered by freezing the accounts of cybercriminals and subsequently returning the money to the affected complainants.

Declining Reported Fraud Cases at State Bank of India​

While the amount of refunds has skyrocketed, the volume of digital fraud cases reported by SBI has seen a consistent decline. In FY24, SBI recorded 13,319 digital fraud cases involving ₹96.65 crore. The number dropped to 10,465 cases in the next fiscal year, which involved ₹67.52 crore.

For FY26, the reported figures stood at just 20 cases, involving a loss of ₹3.59 crore. Crucially, the reply noted that this sharp fall in reported cases for FY26 does not signify an actual reduction in fraud incidents.

Understanding the Shift in Fraud Reporting Scope​

The decline seen in the most recent case counts is explained by changes in regulatory reporting requirements. According to the RBI's revised Master Directions on Fraud Risk Management, dated July 15, 2024, banks are now required to report certain transactions only after they have been concluded as frauds by the bank.

This procedural shift means the data reflects a change in the scope of reporting rather than an actual drop in fraud incidents. It must be noted that compensation paid in any given year may relate to cases logged in earlier periods, as recovery processes often take several months after the incident is reported.

Liability and Compensation Framework for Customers​

The RBI has established a comprehensive liability framework for customers who are victims of unauthorized electronic banking transactions. In response to such incidents, the central bank introduced revised directions specifically addressing compensation for small-value fraudulent electronic banking transactions.

This framework aims to provide prompt financial relief to consumers while bolstering confidence in digital payment systems. Eligible customers can claim reimbursement up to a maximum of ₹50,000. This amount is capped at 85 percent of their net loss or ₹25,000, whichever figure is lower.

Security Controls and Enforcement Action by RBI​

Preventive measures are strengthened through the RBI's Master Direction on Digital Payment Security Controls, which was issued on February 18, 2021. The central bank also provides advisories to banks based on market intelligence and incidents to enable timely corrective action.

Furthermore, the RBI actively assesses banks’ resilience by conducting cyber security preparedness examinations, including onsite IT checks. Based on these audits, the RBI has imposed monetary penalties for non-compliance across 17 banks over the last three financial years.

Key Financial Data Summary (FY24 to FY26)​

Source: Ministry of Finance reply to Lok Sabha.