5 Most Common Banking Frauds in India and How to Avoid Them

5 Most Common Banking Frauds in India and How to Avoid Them

Have you ever wondered how banking fraud happens? Do you think that you can avoid being duped by any banking fraud? Do you know about the most common banking frauds in India and how to avoid them?

If yes, then read on. And if not, then read on as well because this article will help you in understanding the most common types of banking fraud in India.

It will also guide you on how to avoid them. We will also suggest some tips to prevent such fraudulent activities from happening with your bank account or with any other institution that you hold an account with.

5 Most Common Banking Frauds in India and How to Avoid them

Banking frauds have been on the rise and banks are struggling to prevent them with increased vigilance.

How do banks go about this? Let’s take a look at five of the most common banking frauds in India, why they are happening, and what you can do to avoid being a victim yourself.

1. Online Banking Scams

5 Most Common Banking Frauds in India and How to Avoid Them

Online banking scams are one of the more popular types of bank fraud. These scams originate when an individual hacks into a financial institution’s computer system and redirects funds from one account to another.

The hacker will then make it appear as if the transaction was made by the customer, in an attempt to get away with stealing money.

How to avoid it?

Banking scams are prevalent, but there are ways to avoid becoming a victim. One way is to be wary of online offers for free cash.

Scammers use social media or email to offer a tempting prize that is really a money-laundering scheme. Avoiding these scams is easy:

● Never click on any link
● Don’t provide your personal information
● Don’t respond to unsolicited emails

2. ATM/Debit Cards Fraud

atm debit card fraud

A customer deposits cash into his bank account, then withdraws money from an ATM using his debit card.

A thief steals the customer’s debit card information from the bank’s records, copies the customer’s signature from a check or other source of identification, goes to another ATM with a fake ID, and withdraws all of the customer’s money. This scam is often called skimming.

How to Avoid?

To avoid this, you should always check if your ATM/Debit card has been lost or stolen.

Also, when you are withdrawing cash at an ATM, make sure there are not any suspicious individuals around.

And if possible use only machines located within the bank premises as these are less likely to have been tampered with.


Credit card frauds are a major problem in India. One of the most popular methods is when an individual gains unauthorized access to your account by stealing your card information.

The card issuer has limited liability if a fraudulent transaction is made by your credit card.

In other words, if someone gets your number or makes a purchase with your card without your knowledge, the bank will make it right as long as you report it within 60 days of when you find out about it.

How to Avoid?

This can be avoided by:

● Protecting your credit cards with a password or PIN.
● Making sure you don’t write down your PIN on the card or use it for ATM withdrawals
● Only using cards from reputable banks
● Regularly check your statements for any unauthorized activity.

Cheque Frauds

Cheque frauds are the most common type of banking fraud in India. A cheque is a written order given by the customer instructing his bank to pay a certain amount of money either directly into another person’s account or into his own account.

When you deposit a cheque, your bank credits your account with the amount of the cheque but will not withdraw it until you present the cheque for payment.

If you have overdrawn your account, presenting the cheque for payment may cause an overdraft which can be costly because banks charge interest on overdrafts as well as hefty penalties for bounced checks, which can lead to further mismanagement of funds.

How to Avoid?

To avoid this, always ensure the signature matches the back of the cheque. f you have any doubts, do not deposit the cheque at all.

Similarly, keep an eye out for forged signatures by looking at the spacing between words and letters on the cheque.

Be wary of people who try to force you to cash their cheques. You can refuse by saying that your bank does not allow it, or explain why you don’t want to do it.

Misuse of Payment Gateways

atm debit card fraud

Banking fraud is one of the main crimes involving banks. One of the main ways that this crime can occur is through the misuse of payment gateways.

A payment gateway links your bank account to a merchant account, so when you make a purchase, funds are drawn from your account automatically.

This means that someone could use your bank card or account details without your knowledge, which will lead to fraudulent transactions on your statement.

How to Avoid?

To prevent this type of fraud, always log out after using an online banking service and never share login details with anyone else.


In conclusion, financial institutions are becoming more aware of these scams. They’re also putting up additional security measures to protect their customers.

These new security features make it harder for thieves to access your account information.

Keep an eye out for any suspicious activities on your bank statement or credit card statements. If you notice anything amiss, contact the bank right away.

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