The Finance Ministry is suggesting stronger measures to protect citizens from cyber fraud. This decision comes in response to a rise in cybercrime incidents, including the recent Bank of Baroda World app scam. These measures are part of a larger national effort to fight against cybercrime. According to sources, an inter-ministerial meeting was held recently, focusing on enhancing cybersecurity and addressing financial fraud.
Alarming Statistics Highlight the Need for Action
The need for urgent action is underscored by alarming statistics. In 2023 alone, India’s National Crime Records Bureau reported over 1.1 million cases of cyber fraud, amounting to a staggering Rs 7,488.63 crore ($8.9 billion). To tackle 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 forms of cybercrime.
Stricter Procedures for Bank Correspondents
The Finance Ministry is advocating for stricter Know Your Customer (KYC) procedures and more thorough due diligence by banks and financial institutions when onboarding new merchants. This is particularly important for Business Correspondents (BCs) as they may be more vulnerable to security breaches. BCs are bank representatives who assist villagers in opening bank accounts. They receive commissions from the bank for every new account, transaction, or loan application processed through them.
Enhancing Data Security at Merchant Level
The proposal highlights the need for improved data security and protection practices at the merchant and BC level. Strengthening these areas is crucial to minimize vulnerabilities that cybercriminals may exploit.
RBI’s Focus on Fraud Hotspots and Micro ATMs
Sources suggest that the Reserve Bank of India (RBI) may advise banks to review the concentration of BCs in areas with high incidences of cyber fraud. The RBI may also recommend stricter onboarding procedures for BCs and even block micro ATMs involved in fraudulent activities.
RBI’s Ban on Bank of Baroda World App
In October 2023, the Reserve Bank of India (RBI) prohibited state-owned Bank of Baroda from onboarding new customers on its mobile app ‘BoB World’ due to significant supervisory concerns. Bank of Baroda has taken corrective measures in response to the RBI’s directions and has initiated further steps to address any remaining gaps.
The RBI stated that, under Section 35A of the Banking Regulation Act, 1949, it has directed Bank of Baroda to suspend the onboarding of customers onto the ‘BoB World’ mobile application. Any future onboarding will be subject to the bank rectifying the observed deficiencies and strengthening the related processes to the satisfaction of the RBI.
Has Bank of Baroda completed the necessary rectification as per RBI? When will RBI allow BOB to onboard bobworld!