The total sum arising from bank fraud and forgery charges was N120.79 billion in 2020, according to information provided by the Nigeria Deposit Insurance Corporation (NDIC).
Comparing this to the N204.65 billion reported in 2019, however, showed a decline of 40.98%.
However, according to the NDIC 2020 Annual Report, which was obtained from the company’s website, the number of fraud cases increased by 177.10% to 146,183 in 2020 from 52,754 in 2019, a rise of 52.75 percent.
A rising worry in the financial system is the rise in fraud cases, particularly those involving digital and electronic payment systems.
The NDIC reports that banks suffered the least actual loss of the total amount involved—N325 million—during the second quarter of 2020. The total actual loss decreased slightly from N5.46 billion in 2019 to N5.33 billion in the review period, the NDIC reports.
The largest real loss was N2.51 billion, or 25.73 percent of the entire value at risk during that period, in the third quarter of 2020.
The research claims that 10 out of 30 banks were responsible for N119.204 billion, or 99.17% of the total amount involved in fraud and forgery cases during the year under consideration.
The company added that the usage of digital channels contributed to the rise in fraud and forgery cases and that banks have continuously strengthened their cyber-security infrastructure in addition to ongoing consumer education and sensitization efforts to lower the success rate of fraud and forgery. The NDIC reports that mobile banking fraud accounted for 17.35% of incidents of fraud, with ATM card-related fraud accounting for 39.81% of cases.
Additionally, fraudulent conversion of checks made the smallest contribution (0.63%), indicating a move to digital channels or tools.
The company continued by saying banks have consistently enhanced their cyber-security infrastructure in addition to ongoing consumer education and sensitization initiatives to lower the success rate of fraud and forgery. The use of digital channels contributed to the growth in incidents of fraud and forgery.
According to the NDIC, fraud involving ATM cards made up 39.81% of cases, while fraud involving mobile banking made up 17.35% of cases.
Additionally, fraudulent conversion of checks made the smallest contribution (0.63%), indicating a migration to digital channels or instruments.
In related news, the NPL to shareholders’ fund ratio increased by 264 basis points over the review period, rising from 32.97% in 2019 to 35.61%.
However, a breakdown of the total loans in the banking sector revealed that as of December 31, 2020, eight out of 28 banks (excluding NIBs) had 74.05% of the total loans totaling N20.37 trillion, down from the 79.56% reported as of that date. A high concentration that displays oligopolistic tendencies in the control of loans in the banking industry can be seen in the fact that the other 20 banks accounted for 25.95% of the total loans made in the sector.