Mobikwik shares drop 2% after Rs 40 crore fraud, probe underway

The shares of One Mobikwik Systems dropped 2.4% to their intraday low of Rs 303.90 on the BSE on Wednesday after reports said that the digital payments company lost around Rs 40 crore in a suspected fraud triggered by a system glitch earlier this month.

According to the Times of India, around Rs 40 crore were allegedly siphoned off over September 11 and 12 through a blitz of UPI transactions that bypassed the company’s balance checks. Investigators said the glitch, which surfaced after a software update, allowed users to transfer amounts higher than their wallet balances and process transactions even when incorrect PINs were entered.

Police said nearly 5 lakh transactions were executed during the two days, and about 2,500 bank beneficiary accounts have been identified. “We have managed to freeze Rs 8 crore out of the total fraud amount. This money was deposited in these bank accounts,” a source told TOI.

Arrests and probe into possible insider role

Six men were arrested in connection with the fraud, police said, with accounts linked to them containing Rs 9 lakh of the stolen money. Five of the arrested are from Nuh and one from Palwal, identified as Rehan, Waqar Yunus, Wasim Akram, Mohd Amir, Mohd Ansar and Mohd Sakil. All six have been sent to judicial custody.

Police spokesperson Ashok Kumar said the possibility of insider involvement was under investigation. “If any company employee is found to be involved in the scam, strict action will be taken against the individual,” he said.

Nuh police also appealed to the public to come forward by September 23 if they had received unexplained transfers linked to the Mobikwik glitch. “If anyone received transactions on Sept 11 and 12 due to technical security lapses or other reasons via the Mobikwik app or received unauthorised payments through the app and wishes to return them, or has any complaints related to such transactions, they can visit the office of the SP,” the police said in a statement.

Company response

A Mobikwik spokesperson told TOI the firm was “undertaking all possible and necessary efforts to recover the amount.”

The spokesperson said it was “not yet possible to ascertain the impact” since police investigation and recovery efforts had just started.

“Based on the preliminary data, as a risk mitigating measure, the FIR was lodged for an amount of Rs 40 crore, out of which, the company has recovered around Rs 14 crore. Thus, the estimated net impact is Rs 26 crore,” the spokesperson added.

They further said, “The company is taking aggressive collection efforts while pursuing legal course of action to recover the full amount over a period of time.”
Second such incident

This is the second such incident for the company. In October 2017, Mobikwik was allegedly defrauded of about Rs 19 crore when funds were moved to thousands of personal bank accounts in a similar manner.

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