FinMin for enhanced KYC, due
diligence for merchants & banking correspondents to check fraud
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, say sources
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.
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.
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 ₹7,488.63 crore were reported, as per the data compiled by National
Crime Records Bureau (NCRB).
To strengthen the mechanism to deal with cyber crimes 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 cyber crime in the country.
As part of its efforts to curb growing cyber fraud, the Reserve
Bank 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, the Reserve Bank of India has shared a list
of 442 unique digital lending apps with the IT Ministry to whitelist with Google.
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 the Reserve
Bank of India (RBI) and the Department of Financial Services (DFS) under the
Finance Ministry.
www.thehindubusinessline.com dt. 15.04.2024