Easy Office
LCI Learning

Finance Ministry Proposes Enhanced KYC Procedure To Combat Cyber Scams

Last updated: 17 April 2024

In a proactive move aimed at curbing incidents like the BoB World app scam and other financial frauds, the finance ministry is advocating for a robust KYC procedure and rigorous due diligence by banks and financial institutions. This initiative aims to protect customers from cyber risks and ensure the integrity of the financial ecosystem.

According to sources familiar with the matter, stringent scrutiny of merchants and Business Correspondents (BCs) offering banking services in rural and remote areas is essential not only to prevent fraud but also to strengthen the overall financial security framework.

Finance Ministry Proposes Enhanced KYC Procedure To Combat Cyber Scams

Amid rising concerns over data security, sources emphasize the need for enhanced measures to safeguard sensitive information at the merchant and BC levels. As part of this effort, the RBI may advise banks to assess the concentration of BCs in cyber fraud hotspots and take necessary actions such as onboarding reviews and blocking of compromised micro ATMs.

These recommendations were put forward during an inter-ministerial meeting focused on bolstering cyber security and combating financial fraud. In 2023 alone, a staggering 11,28,265 cases of financial cyber fraud amounting to Rs 7,488.63 crore were reported, highlighting the urgent need for comprehensive measures.

To address the growing threat of cyber crimes, the central government has established the 'Indian Cyber Crime Coordination Centre' (I4C) under the Ministry of Home Affairs. Additionally, the Reserve Bank is contemplating the creation of a Digital India Trust Agency (DIGITA) to crack down on illegal lending apps.

The proposed agency is envisioned to verify digital lending apps and maintain a public register of authenticated apps, a move aimed at safeguarding users from fraudulent practices. Moreover, in collaboration with the IT Ministry, the RBI has shared a list of 442 unique digital lending apps for whitelisting with Google.

In response to mounting concerns, Google has taken decisive action by removing over 2,200 digital lending apps from its app store between September 2022 and August 2023. The tech giant has revised its policy to only allow apps published by RBI-regulated entities or those in partnership with such entities, following requests from the RBI and the Department of Financial Services under the finance ministry.

By advocating for stringent KYC procedures, robust due diligence, and collaborative efforts between regulatory bodies and tech companies, the finance ministry aims to reinforce the resilience of India's financial landscape against evolving cyber threats and financial frauds.

Join CCI Pro

Category Others   Report



More »