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Fintech, RBI, and I4C Unite to Tackle Emerging Cyber Frauds
The Fintech Association of India (FACE) has urged its members to explore joining the Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS), a component of the National Cybercrime Reporting Portal. In addition, FACE has asked its members to designate a nodal officer responsible for addressing customer complaints and collaborating with law enforcement agencies to combat fraud.
This initiative by FACE is significant, especially as the organization is a contender to become a self-regulatory organization (SRO) for fintech lenders. The Reserve Bank of India (RBI) is expected to announce the selection of the first SRO in this domain soon, with the Digital Lenders’ Association of India being the other candidate.
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The CFCFRMS offers a unified platform that brings together various stakeholders, such as states, union territories, major banks, financial intermediaries, payment wallets, cryptocurrency exchanges, and e-commerce companies. They collaborate to ensure swift, coordinated, and system-based action to prevent the transfer of funds from victims’ accounts to cybercriminals.
The rise in digital transactions and the convergence of regulated entities—including banks, traditional non-banking financial companies, fintech startups, insurance firms, and payment companies—have created more touchpoints vulnerable to cyber fraud.
It is worth noting that the RBI is also working on establishing a Digital Payments Intelligence Platform (DPIP) that will leverage advanced technology to reduce payment-related fraud risks. A committee, chaired by A.P. Hota, former CEO of the National Payments Corporation of India, has been formed to provide recommendations within two months. The RBI highlighted that many fraud incidents occur when unsuspecting victims are manipulated into making payments or sharing their credentials. Although the payment ecosystem—comprising banks, NPCI, card networks, payment aggregators, and payment apps—continually implements measures to protect consumers from such frauds, there is an increasing need for network-wide intelligence and real-time data sharing across payment systems.
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Last week, Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha that the monetary losses from cyber fraud had more than doubled to Rs 177.05 crore in FY24, up from Rs 69.68 crore in FY23, primarily due to fraud involving credit cards, debit cards, and internet banking. The losses amounted to Rs 80.33 crore in FY22, Rs 50.10 crore in FY21, and Rs 44.22 crore in FY20.
The RBI’s Report on Currency and Finance FY24, themed “India’s Digital Revolution,” cited a survey on digital payments awareness, which found that 94.5% of users had not encountered any fraud. The likelihood of encountering fraud was lower in metropolitan areas (4.1%) compared to semi-urban regions (6.4%). “Vishing,” or voice phishing, where scammers deceive individuals into divulging sensitive information over the phone, was the most common fraud method (54.2%), followed by phishing (37.2%), misuse of the ‘collect request’ feature (28.7%), and remote access fraud (25.5%).
Furthermore, around 11% of digital fraud attempts involved fake numbers linked to e-wallets or banks. While overall fraud incidence remains low, ensuring a secure, reliable, and trustworthy digital payment ecosystem will attract more users.
Tackling Fraud
- CFCRMS serves as an integrated platform where states, Union Territories, and major banks collaborate to combat cyber fraud.
- According to the RBI’s FY24 Currency and Finance Report, 94.5% of users reported not experiencing any fraud.
- Fraud incidents were lower in metropolitan areas (4.1%) compared to semi-urban regions (6.4%).
- The most common fraud methods were vishing (54.2%), phishing (37.2%), misuse of ‘collect requests’ (28.7%), and remote access fraud (25.5%).