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Finance Ministry Eyes Enhanced KYC Due Diligence For Merchants, Banking Correspondents To Curb Frauds

With the rise in cyber frauds, safeguarding customers against potential risks necessitates strengthening data security and checks.

April 15, 2024
April 15, 2024
Cyber Fraud

Cyber Fraud

In a bid to check incidence of BoB World app scam and other such financial frauds, the finance ministry makes a case for an enhanced KYC procedure and extensive due diligence by banks and financial institutions for onboarding merchants to safeguard customers against cyber risks, sources said. Appropriate due diligence of merchants and Business Correspondents (BCs) who offer banking services in rural and remote areas is necessary not only to check frauds but also to fortify the financial ecosystem, sources said.

Also Read: How Can Senior Citizens Protect Themselves From Cyberattacks And Frauds

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According to sources, there is a need to strengthen data security and data protection at the level of merchants and BCs as chances of compromise are higher at that level. Therefore, sources said, RBI may advice banks and financial institutions to review the concentration of BCs in cyber fraud hotspots and their onboarding, blocking of micro ATMs found to be involved in frauds.

 

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This was one of the suggestions made at an inter-ministerial meeting held recently with the objective of furthering cyber security and checking financial fraud, sources said.

 

During 2023, as many as 11,28,265 cases of financial cyber fraud worth Rs 7,488.63 crore were reported, as per the data compiled by National Crime Records Bureau (NCRB).To strengthen the mechanism to deal with cybercrimes in a comprehensive and coordinated manner, the central government, through the Ministry of Home Affairs, has set up the ‘Indian Cyber Crime Coordination Centre’ (I4C) to deal with all types of cybercrime in the country.

 

As part of its efforts to curb growing cyber fraud, the Reserve Bank of India (RBI) is considering setting up a Digital India Trust Agency (DIGITA) to stop the mushrooming of illegal lending apps. The proposed agency will enable verification of digital lending apps and maintain a public register of verified apps, sources said. Meanwhile, RBI has shared a list of 442 unique digital lending apps with the IT Ministry to whitelist with Google.

Also Read: More People Will Be Dependent In Old Age Unless They Prepare Themselves Now: Deepak Mohanty

Besides, Google has removed over 2,200 digital lending apps (DLAs) from its app store from September 2022 to August 2023.The search giant has updated its policy regarding the enforcement of loan apps on the Play Store, and allowed only those apps which are published by the RBI’s regulated entities (REs) or those working in partnership with REs. This policy change by Google has happened at the request of RBI and the Department of Financial Services (DFS) under the finance ministry.

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