“RBI Announces New Digital Payments Intelligence Platform to Combat Rising Fraud”

The Reserve Bank of India (RBI) on Friday announced the creation of a dedicated platform to address the growing issue of 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.”

Establishing the Digital Payments Intelligence Platform:

The new platform aims to leverage advanced technologies to combat payment fraud by facilitating network-level intelligence and real-time data sharing. Adhil Shetty, chief executive officer (CEO) of Bankbazaar.com, emphasized the importance of minimizing fraud to sustain trust. He acknowledged the efforts by banks, NPCI, card networks, payment aggregators, and payment apps to protect customers but stressed the need for a more integrated approach.

“The RBI’s proposal to establish a Digital Payments Intelligence Platform 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), there were 36,075 reported digital frauds in banks, marking an increase of nearly 166 percent from the 13,564 cases reported in FY23. However, the amount involved in these frauds decreased by 46.7 percent, dropping to Rs 13,930 crore from Rs 26,127 crore in FY23, according to the RBI’s annual report.

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 highlighted 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.”

Next Steps:

The RBI has constituted a committee to examine various aspects of setting up the Digital Payments Intelligence Platform. The committee is expected to provide its recommendations within the next two months, paving the way for the establishment of this critical infrastructure to safeguard the digital payments ecosystem.

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