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RBI to set up digital payments intelligence platform to prevent fraud

New Delhi, Jun 7, 2024 

'System-wide approach to prevent and mitigate' digital payment frauds, says Shaktikanta Das

The Reserve Bank of India (RBI) on Friday announced creating a dedicated platform to address digital payment frauds in the country.

"Growing instances of digital payment frauds highlight the need for a system-wide approach to prevent and mitigate such frauds," said RBI Governor Shaktikanta Das. "It is, therefore, proposed to establish a digital payments intelligence platform for network-level intelligence and real-time data sharing across the digital payments ecosystem."

"To take this initiative forward, the RBI has constituted a committee to examine various aspects of setting up the platform."

Setting up a digital payments intelligence platform

"Minimising fraud is essential to sustaining trust. Despite efforts by banks, NPCI, card networks, payment aggregators, and payment apps to protect customers, there is a need for network-level intelligence and real-time data sharing," said Adhil Shetty, chief executive officer (CEO) of (The National Payments Corp of India operates the popular unified payment interface.)

"The RBI’s proposal to establish a Digital Payments Intelligence Platform, leveraging advanced technologies to combat payment fraud, is a significant step forward. We eagerly await the recommendations of the committee which will explore the establishment of this platform and provide their insights within the next two months," said Shetty.

Surge in digital frauds

In the financial year 2023-24 (FY24), as many as 36,075 digital frauds were reported in banks, marking an increase of nearly 166 per cent from the 13,564 cases reported in FY23. The amount involved in these frauds decreased by 46.7 per cent, dropping to Rs 13,930 crore from Rs 26,127 crore in FY23, according to the RBI's annual report last month.

An analysis of bank group-specific fraud cases over the past three years shows that while the private sector reported a higher number of frauds, public sector banks accounted for the highest total fraud amount. Most fraud cases have occurred within the realm of digital payments, particularly involving cards and internet transactions, both in terms of frequency and monetary value.

The annual report said that frauds in the loan portfolio (under the advances category) constitute the primary source of financial loss. Private sector banks mostly reported frauds in small-value card and internet transactions, whereas frauds in public sector banks were primarily concentrated within the loan portfolio. As the RBI's analysis revealed, "While small value card/internet frauds contributed the most to the number of frauds reported by private sector banks, frauds in public sector banks were mainly in loan portfolios".

[The Business Standard]

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