Despite falling fraud rates in cards and UPI, India must pursue a zero-fraud goal to protect trust and expand digital payments, RBI Deputy Governor T Rabi Sankar said
RBI Deputy Governor T Rabi Sankar said AI model MuleHunter had made progress with participation from several banks.
While fraud incidents in payment systems have declined — including in card-based transactions — and frauds in the unified payments interface (UPI) remain as low as about 0.68 transactions per 100,000 transactions, the ecosystem must pursue a zero-fraud objective to remain vigilant and build systems that minimise such incidents and maintain public trust, said T Rabi Sankar, deputy governor, Reserve Bank of India (RBI), on Friday.
Speaking at the Indian Banks’ Association’s 21st annual banking technology conference, expo and citations, he said: “If you look at frauds in the payment systems, the numbers have been going down. It used to be quite high for cards, but the numbers are coming down. The incidents of frauds in UPI are just about 0.68 transactions per one lakh transactions.”
Although unlikely, pursuing a zero-fraud objective is necessary to remain vigilant and to build systems that minimise such incidents and maintain public trust, Sankar said. This is essential for the development and inclusion of payment systems, as a large section of India’s population has yet to adopt digital payments.
Periodic surveys reflect this trend — in 2022, about 42 per cent of respondents had ever used a digital payment instrument, a share that increased in the 2025 survey.
He further said that while Mule Hunter has made progress with participation from several banks, the message is that collaboration is essential for both Mule Hunter and the DPIP when their pilots begin. Banks need to participate and ensure their teams engage regularly with the Reserve Bank Innovation Hub and the fintech department so that these initiatives can be rolled out quickly, Sankar said.
At present, Mule Hunter works on data specific to individual banks. Concerns about accessing data across multiple banks can be addressed by positioning such systems as digital public infrastructure under a trusted entity, enabling the use of system-wide data to develop such tools.
The amount involved in banking system frauds surged to ₹21,515 crore in the first half of FY26 (H1FY26), up 30 per cent from the same period last year, even as the number of frauds fell 2.8 times to 5,092, according to the RBI’s Report on Trend and Progress of Banking in India 2024-25.
In comparison, the amount involved in banking system frauds stood at ₹16,569 crore in H1FY25, while the number of cases was higher at 18,386. For the full FY25, frauds amounted to ₹34,771 crore and the number of cases stood at 23,879.
The increase in the value of frauds in H1FY26 was mainly attributed to the re-examination and fresh reporting of 122 cases involving ₹18,336 crore, after ensuring compliance with the Supreme Court’s judgment dated March 27, 2023.
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