Loan fraud cases fall, but value soars; PSBs account for 74% of amount

Bengaluru: Public sector banks accounted for nearly three-fourths of the value involved in suspected anomalous loan applications reported by banks and financial institutions in FY26, despite accounting for just over half the cases, according to a new report by Experian.Data based on the Reserve Bank of India’s Annual Report 2025-26 and analysed by Experian showed that public sector banks (PSBs) reported 5,418 anomalous applications involving Rs 35,709 crore in FY26, accounting for about 74% of the total amount involved across lenders.The trend has been building over the past three years. At PSBs, the number of anomalous applications declined from 7,460 in FY24 to 6,935 in FY25 and 5,418 in FY26. However, the amount involved rose sharply from Rs 9,254 crore in FY24 to Rs 25,667 crore in FY25 and Rs 35,709 crore in FY26.While the number of suspected anomalous applications at PSBs fell by nearly 27% over the period, the value involved rose nearly fourfold. The average amount involved per anomalous application consequently increased from about Rs 1.2 crore in FY24 to Rs 3.7 crore in FY25 and Rs 6.6 crore in FY26.Private sector banks reported 24,207 anomalous applications involving Rs 2,722 crore in FY24. The number fell to 14,233 applications involving Rs 10,088 crore in FY25 and further to 3,956 applications involving Rs 11,399 crore in FY26.Across all lenders, anomalous applications declined from 36,060 in FY24 to 23,953 in FY25 and 10,114 in FY26. Yet, the amount involved rose from Rs 12,230 crore to Rs 36,014 crore and then Rs 48,021 crore. The average value of an anomalous application across lenders increased from Rs 34 lakh in FY24 to Rs 4.7 crore in FY26.Experian attributed the changing risk landscape partly to increasingly sophisticated fraud schemes. Rather than making a large number of fraudulent applications, organised networks can exploit weaknesses in digital lending processes by manipulating borrower information.The report highlighted identity misuse, synthetic identities and mule accounts as key concerns. It also flagged false employment, income, identity and contact details, along with multiple PAN usage, as indicators of potential application fraud.These risks are becoming harder to tackle as lending moves online and faster digital onboarding requires lenders to validate more information without traditional physical checks. The report also found that consortium-level rejections, where inconsistencies in a customer’s profile are identified using information available across lenders, account for more than a third of application anomaly cases, underlining the importance of information-sharing among lenders.Get the latest Business News and Live updates. Download the TOI app.