Financial Crime World

India Sees Rs 1,750 Crore Payment Frauds in 7 Months: RBI Data

Worrying Trend of Online Payment Frauds

Banks and payment operators in India have reported online payment frauds worth Rs 1,750 crore in the seven months ended March 2023. This alarming trend is attributed to the increasing use of digital platforms and lack of awareness among consumers about techno-financial ecosystems.

RBI’s Report Highlights

  • Transactions involving mobile apps were worth a staggering Rs 233 lakh crore during the year ended March 2023.
  • Net banking transactions stood at Rs 915 lakh crore.
  • ATM cash withdrawals reached Rs 33.04 lakh crore.

Experts’ Views on Payment Frauds

Krishnan Chari, Chief Risk Officer at Worldline India, attributes the rise in payment frauds to the increasing use of digital platforms and lack of awareness among consumers about techno-financial ecosystems: “Fraudsters are using innovative methods to defraud people, especially new entrants who are not familiar with the digital ecosystem.”

RBI’s Efforts to Improve Fraud Detection and Prevention

The Reserve Bank of India (RBI) has migrated its fraud reporting module to DAKSH - Reserve Bank’s Advanced Supervisory Monitoring System from January 1, 2023. This move aims to improve fraud detection and prevention in the payment system.

Risks to Financial Stability

Payment industry officials warn that the lack of a systemic risk management framework for payment systems poses risks to financial stability: “Policy makers need to lay out guidelines for paytech institutions for compliance on fraud and cyber risk management,” said Chari.

RBI’s Warning and Expert Advice

The RBI has also warned customers about new forms of fraud attempts, including fake messages and phishing websites designed to steal sensitive information such as PINs and passwords. Experts urge consumers to be cautious while using digital platforms and to verify the authenticity of transactions before making payments:

  • Be aware of fake messages and phishing websites.
  • Verify the authenticity of transactions before making payments.
  • Use alternative authentication mechanisms for payment transactions.
  • Implement stringent security controls to mitigate and reduce fraud.

Impact of Payment Frauds

Fraud has significant impacts on financial costs, customer loyalty, reputation loss, and liabilities for financial institutions. Experts emphasize the need for alternative authentication mechanisms for payment transactions and stringent security controls to mitigate and reduce fraud.