Yes Bank Under RBI Scrutiny After Latin American Fraud Hits 5,000 Forex Cards; $0.28M at Risk

India’s banking regulator has intensified scrutiny of Yes Bank after a series of unauthorised cross-border transactions raised concerns over possible data vulnerabilities in its multi-currency prepaid forex card operations.

The RBI has summoned senior officials of the lender to provide a detailed account of the incident, the detection mechanism, and the measures initiated to prevent further risk exposure.

The suspicious transactions were reportedly routed through overseas e-commerce merchants within a limited time window in late February. An internal forensic audit at Yes Bank pinpointed a fraud wave occurring in the early hours of February 24, 2026, traced to 15 merchants operating in a Latin American jurisdiction. The lender confirmed that ₹2.54 crore in fraudulent transactions were successfully processed across roughly 5,000 customer accounts before containment protocols were fully deployed. However, the bank’s automated fraud monitoring systems successfully intercepted and blocked 688 additional unauthorized attempts, worth an estimated ₹90 lakh, effectively preventing a 35% higher potential loss. Yes Bank is currently coordinating with its primary card networks to execute chargebacks, to ensure a 'zero-liability' outcome for all affected customers.

Additional unauthorised attempts were blocked by internal monitoring systems, which further limited financial exposure. 

Regulatory Focus on Data Security and Fraud Monitoring

The RBI is understood to be assessing whether sensitive card credentials. This potentially included card verification data and was exposed during the episode. Yes Bank has stated that customer funds remain protected, and corrective action has been initiated. Regulators are examining the strength of encryption protocols, transaction surveillance systems, and the timeliness of reporting.

The incident has also drawn attention to the bank’s partnership model. The forex card product is issued in collaboration with BookMyForex. This places third-party risk governance under regulatory review. As banks increasingly integrate fintech platforms for distribution and customer acquisition, the RBI has been sharpening its supervisory lens on shared technology infrastructure and data handling standards.

Yes Bank has said that it has imposed geographical restrictions on certain overseas online transactions. It is coordinating with card networks to reverse unauthorised debits through established chargeback channels. Affected customers have been notified, according to people familiar with the development.

The development comes amid heightened regulatory attention on cybersecurity resilience within India’s financial ecosystem. As digital payment volumes expand and outbound travel demand fuels the growth of multi-currency travel cards, cross-border fraud risks have become increasingly complex.

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