Banks bring back in-person verification as digital fraud risks escalate
New Delhi, Dec 12, 2025
Banks are slowing down fully online account opening after a rise in mule accounts and digital fraud; lenders are now adding in-person checks and branch visits to make customer verification stronger
At a time when banks have been racing to move every service online, many are reversing course. Large lenders are bringing back physical checks and in-person verification to stop the growing problem of identity theft and mule accounts, according to a report by The Economic Times.
For years, banks tried to simplify account opening into a quick, single-click digital process. But a spike in fraudulent transfers linked to mule accounts has forced them to rethink this approach.
The news report quoted bankers as saying that lenders such as ICICI Bank, HDFC Bank, State Bank of India, Bank of India and Bank of Baroda have paused their fully digital onboarding systems. Customers opening new accounts are now being asked to visit the nearest branch for document checks or to meet bank officials who conduct verification at their homes.
The move, they added, also follows the Reserve Bank of India’s recent penalties on several banks for weak KYC (Know Your Customer) compliance during online onboarding.
ICICI stops insta-account service
ICICI Bank has discontinued its instant online account-opening service entirely. Only salary accounts are still opened through a digital route. All other customers must complete the process through an assisted model, where a branch executive visits them and completes the paperwork digitally, the news report said.
HDFC Bank, however, said it continues to onboard customers digitally but is strengthening its systems to make them more secure.
The news report quoted a bank spokesperson as saying that the lender is moving to an integrated, assisted digital model. According to the spokesperson, this approach combines technology with guided support to help customers choose suitable products while ensuring safer onboarding.
RBI data shows fewer fraud cases, but fraud amount triples
While banks are tightening customer checks, new RBI data shows an interesting trend: the number of bank fraud cases fell in FY25, but the money involved grew sharply.
The RBI’s annual report for FY25 recorded 23,953 fraud incidents -- 34 per cent fewer than the previous year. However, the value of these frauds jumped nearly threefold to ₹36,014 crore. The data covers frauds of ₹1 lakh and above and includes cases reported in FY25 even if the fraud occurred earlier.
Private-sector lenders reported the highest number of frauds -- 14,233 cases, or nearly 60 per cent of all incidents. Public-sector banks, however, saw the biggest losses. They reported 6,935 cases but accounted for ₹25,667 crore of the total fraud amount, or over 71 per cent.
Private banks reported ₹10,088 crore in fraud losses.
Digital payments lead in number of frauds
Digital payments, card and internet transactions, saw the most fraud cases: 13,516 in FY25, accounting for over 56 per cent of all incidents. These cases involved ₹520 crore.
However, the largest losses were in the loans segment. Advances accounted for 7,950 fraud cases but made up over 92 per cent of the total amount involved -- ₹33,148 crore.
The RBI noted that most frauds in private banks occurred in digital payments, while public-sector banks saw major frauds in loan portfolios.
[The Business Standard]
