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The Finance Ministry is reportedly proposing stricter measures to protect citizens from cyber fraud. This comes after a surge in incidents, including the recent Bank of Baroda World app scam. These measures are said to be part of a broader national effort to combat cybercrime. The sources mentioned a recent inter-ministerial meeting focused on bolstering cybersecurity and tackling financial fraud.
The urgency for action is underscored by statistics.In 2023 alone, India’s National Crime Records Bureau reported over 1.1 million cyber fraud cases amounting to a staggering Rs 7,488.63 crore ($8.9 billion). To address this growing threat, the Ministry of Home Affairs established the Indian Cyber Crime Coordination Centre (I4C). This central agency coordinates efforts across the country to combat all types of cybercrime.
Review Bank’s Business Correspondents
The ministry is said to be advocating for stricter Know Your Customer (KYC) procedures and more thorough due diligence by banks and financial institutions when onboarding new merchants. This applies particularly to Business Correspondents (BCs) as they may be more vulnerable to security breaches. For those unaware, BCs are bank representatives, they help villagers to open bank accounts. Business Correspondents get commission from the bank for every new account opening, every transaction made via them, every loan-application processed etc.
Strengthening Data Security at Merchant Level
The proposal emphasizes the need for improved data security and data protection practices at the merchant and BC level. This is because weaknesses in these areas can create opportunities for cybercriminals.
RBI May Target Fraud Hotspots, including micro ATMs
The sources suggest that the Reserve Bank of India (RBI) may advise banks to review the concentration of BCs in areas with a high incidence of cyber fraud. Additionally, the RBI may recommend stricter onboarding procedures for BCs and even block micro ATMs involved in fraudulent activity.
RBI ban on Bank of Baroda World app
In October 2023, the Reserve Bank of India (RBI) barred state-owned Bank of Baroda from onboarding new customers on its mobile app ‘BoB World’ following material supervisory concerns. Responding to the RBI’s directions, the BoB said that it has already carried out corrective measures to address the concerns of the central bank, and has initiated further steps to plug any remaining gaps.
“The Reserve Bank of India has, in exercise of its power, under Section 35A of the Banking Regulation Act, 1949, directed Bank of Baroda to suspend, with immediate effect, any further onboarding of their customers onto the ‘bob World’ mobile application,” the central bank said in a statement.
The action, the RBI said is based on certain material supervisory concerns observed in the manner of onboarding of their customers onto this mobile application. “Any further onboarding of customers of the bank on the ‘bob World’ application will be subject to rectification of the deficiencies observed and strengthening of the related processes by the bank to the satisfaction of RBI,” it added.
The urgency for action is underscored by statistics.In 2023 alone, India’s National Crime Records Bureau reported over 1.1 million cyber fraud cases amounting to a staggering Rs 7,488.63 crore ($8.9 billion). To address this growing threat, the Ministry of Home Affairs established the Indian Cyber Crime Coordination Centre (I4C). This central agency coordinates efforts across the country to combat all types of cybercrime.
Review Bank’s Business Correspondents
The ministry is said to be advocating for stricter Know Your Customer (KYC) procedures and more thorough due diligence by banks and financial institutions when onboarding new merchants. This applies particularly to Business Correspondents (BCs) as they may be more vulnerable to security breaches. For those unaware, BCs are bank representatives, they help villagers to open bank accounts. Business Correspondents get commission from the bank for every new account opening, every transaction made via them, every loan-application processed etc.
Strengthening Data Security at Merchant Level
The proposal emphasizes the need for improved data security and data protection practices at the merchant and BC level. This is because weaknesses in these areas can create opportunities for cybercriminals.
RBI May Target Fraud Hotspots, including micro ATMs
The sources suggest that the Reserve Bank of India (RBI) may advise banks to review the concentration of BCs in areas with a high incidence of cyber fraud. Additionally, the RBI may recommend stricter onboarding procedures for BCs and even block micro ATMs involved in fraudulent activity.
RBI ban on Bank of Baroda World app
In October 2023, the Reserve Bank of India (RBI) barred state-owned Bank of Baroda from onboarding new customers on its mobile app ‘BoB World’ following material supervisory concerns. Responding to the RBI’s directions, the BoB said that it has already carried out corrective measures to address the concerns of the central bank, and has initiated further steps to plug any remaining gaps.
“The Reserve Bank of India has, in exercise of its power, under Section 35A of the Banking Regulation Act, 1949, directed Bank of Baroda to suspend, with immediate effect, any further onboarding of their customers onto the ‘bob World’ mobile application,” the central bank said in a statement.
The action, the RBI said is based on certain material supervisory concerns observed in the manner of onboarding of their customers onto this mobile application. “Any further onboarding of customers of the bank on the ‘bob World’ application will be subject to rectification of the deficiencies observed and strengthening of the related processes by the bank to the satisfaction of RBI,” it added.
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