After the Bank of Baroda World app scam, the RBI took action by prohibiting the bank from onboarding new customers on the mobile app due to material supervisory concerns. In recent developments reportedly finance ministry planning to take proactive measures to protect citizens from cyber fraud’s.
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The urgency for action is was due to raise in alarming statistics. In 2023 alone, India witnessed over 1.1 million cyber fraud cases, amounting to a staggering Rs 7,488.63 crore (USD 8.9 billion), as reported by the National Crime Records Bureau. To address this growing threat comprehensively, the Ministry of Home Affairs established the Indian Cyber Crime Coordination Centre (I4C), which serves as a central agency coordinating efforts nationwide to combat cybercrime effectively.
Finance Ministry’s Proposal for Cyber Fraud Prevention
The Finance Ministry is taking proactive measures to safeguard citizens from cyber fraud, particularly in the wake of recent incidents like the Bank of Baroda World app scam. These proposed measures are part of a broader national strategy to combat cybercrime, reflecting the government‘s commitment to ensuring digital security.
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To mitigate cyber risks, the Finance Ministry is advocating for stricter Know Your Customer (KYC) procedures and enhanced due diligence by banks and financial institutions, especially when onboarding new merchants. This heightened scrutiny is particularly crucial for Business Correspondents (BCs), who play a significant role in rural banking by facilitating various transactions. Strengthening KYC norms for BCs can fortify the first line of defense against potential security breaches.
Recognizing the critical role of data security, the proposed measures emphasize the need for robust data protection practices at both the merchant and BC levels. Strengthening data security protocols is imperative to prevent vulnerabilities that cybercriminals may exploit.
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According to TOI report the Reserve Bank of India (RBI) is expected to intervene by targeting potential fraud hotspots, including areas with a high concentration of BCs. The RBI may recommend stricter onboarding procedures for BCs and consider blocking micro ATMs involved in fraudulent activities to curb cyber fraud effectively.
