Here’s How RBI Aims to Create a Safer Environment for Digital Transactions

A December 2024 report from the Reserve Bank of India (RBI) flagged the growing incidences of banking fraud.

Between April and September 2024, 18,461 fraud cases were reported, with losses amounting to Rs 21,367 crore. This is a significant increase from the same period in the previous year, which saw 14,480 fraud cases, involving a much lower amount of Rs 2,623 crore.

In just a year, the number of reported fraud cases rose by nearly 28%, while the financial impact increased more than eightfold.

The report further revealed that internet and card frauds were the most prevalent.

From phishing scams and malware attacks to fake QR codes, scammers have seemingly unending ways to prey on unsuspecting individuals.

But mobile numbers, being a unique identifier linked to transaction verifications, OTPs, and sensitive bank accounts or payment data, have become a primary target for these fraudsters.

They obtain customer mobile numbers illegally by scraping information from social media platforms, leaked databases, fake online forms, and automated dialers.

Here are some ways scammers misuse mobile numbers...

• Fake Delivery - A method of sending customers fake delivery messages or calls and asking them to verify sensitive details confirming an OTP. This gives scammers unauthorised access to the customer's mobile, which they use for fraudulent transactions.

• Fake Bank Calls - Scammers pretend to be a bank/ financial institution representative and talk about suspicious activity in the customer's bank account, such as an ATM card block. They ask customers to verify their banking details, getting access to sensitive information for malicious activities.

• Digital Arrest Scams - Fraudsters impersonate police officers, claiming the victim is involved in criminal activity and demanding money/bribe to avoid arrest.

• Lottery Scams - Scammers inform the customer via SMS or email that they have won a prize/lottery, requesting personal details to claim it.

RBI's New Guidelines for Banks and Financial Institutions to Prevent Online Frauds

Taking cognisance of the growing risks, the RBI has rolled out new guidelines aimed at mitigating digital transaction frauds, particularly frauds related to mobile numbers, as per a notification dated January 17, 2025.

1. Mobile Number Revocation List (MNRL)

The RBI has mandated the use of the Mobile Number Revocation List (MNRL) available on the Digital Intelligence Platform (DIP). This tool allows financial institutions to examine, verify and clean their customer databases to remove or track inactive accounts.

As scammers often leverage these revoked mobile numbers and accounts for fraud, detecting them early will help prevent possible cases.

Banks have been instructed to prepare Standard Operating Procedures (SOPs) for incorporating the required changes.

2. Sharing of Verified Customer Care Numbers with the DIP

The next crucial RBI instruction is to provide the DIP with verified customer care numbers, which will be published on the "Sanchar Saathi" portal.

The move aims to make customer communication more transparent and boost their confidence in the banks or financial firms.

3. Dedicated Number Series for Communication

Financial institutions are required to use the '1600xx' numbering series exclusively for service or transaction calls. The '140xx' numbering series must be used for promotional voice calls.

This move will help segregate the calls and filter scam calls, reducing the risk of fraudsters using those numbers to dupe citizens.

Also, banks are required to spread awareness about these issues and safety precautions to customers via emails, SMS and other channels. Banks, financial institutions, and payment system providers and participants are instructed to comply with these instructions no later than March 31, 2025.

Additionally, in a recent meeting held with public and private sector banks, RBI Governor, Mr Sanjay Malhotra urged banks to establish robust and proactive systems to prevent such frauds and strengthen their supervision of third-party service providers.

TRAI Guidelines for Banks and Financial Institutions to Prevent Online Frauds

The TRAI (Telecom Regulatory Authority of India) has emphasised the need for Principal Entities (PEs), such as banks, insurance firms, and stockbrokers, to use Distributed Ledger Technology (DLT) and register with telecom service providers for sending SMS or calls.

In conjunction with the RBI, TRAI has also mandated using only the authorised '140' and '160' numbering series for promotional and transactional calls, respectively.

TRAI has further instructed senders to use pre-approved content templates with fixed and variable components to prevent misuse.

Variables must be pre-tagged for specific purposes, such as customer names, dates, or transaction amounts.

Any use of unregistered headers, unauthorised telemarketers, or improper usage of templates may lead to penalties, including disconnection of telecom resources for up to two years.

Additionally, as a part of broader efforts to combat rising digital scams, TRAI has also started a pre-call warning system during outgoing calls to alert users about various scams like digital arrests, impersonation calls, and trading scams.

These messages would be communicated through various vernacular languages and encourage everyone to report suspicious activities to the concerned authorities.

[Read- Mumbai Torres Jewellery Scam: Protect Yourself from Financial Frauds and Ponzi Schemes]

Consequences of Non-Compliance

Both the RBI and TRAI have stressed the importance of compliance to maintain financial integrity and consumer trust.

Failing to comply with the prescribed guidelines, such as using unauthorised 10-digit mobile numbers for promotional calls, could result in serious repercussions. Offenders may face telecom service suspension, blacklisting, or legal action.

The combined efforts of the RBI and TRAI will help mitigate the risk of fraud by establishing a more secure infrastructure for storing customer data and increasing communication transparency.

In addition to this, the RBI is taking several measures to continue curbing cases of online fraud.

For instance, The RBI's Innovation Hub in Bengaluru has developed an artificial intelligence-based application called 'MuleHunter.AI' to tackle digital scams involving mule accounts.

Scammers use mule accounts to launder illegal funds, where the accounts belong to legitimate individuals who unknowingly provide access. The application aims to detect these mule accounts and prevent illegal transactions.

As the RBI continues its uphill battle against online fraud, it is important to stay vigilant about security and take proactive measures to enhance financial literacy.

Here are some ways to protect yourself:

• Never disclose personal information like OTPs, PINs, or passwords, as genuine organisations, including banks, will never ask for such sensitive details through calls, emails, or SMS.

• Be wary of unsolicited calls or messages regarding financial matters.

• Verify caller identity before sharing any personal information.

• Refrain from sharing sensitive information like your phone number, PAN, or Aadhaar number on social media or public platforms where scammers can easily get hold of this information.

• Keep your software and banking apps updated with the latest security patches, and limit yourself to one or two trusted payment apps.

• Regularly monitor account statements for suspicious transactions and enable SMS alerts for real-time updates.

To Conclude...

As India's digital economy grows, so do the rising cases of digital scams and frauds. The RBI, TRAI, and the government are continuing their ongoing efforts to improve finance infrastructure and strengthen regulatory oversight to curb online frauds.

However, a combined effort from citizens and regulatory bodies is needed to create a safer environment for digital transactions.

By remaining alert, identifying warning signs, and proactively securing, you can safeguard yourself from malicious intent.

Be thoughtful in your approach.

We are on Telegram! Join thousands of like-minded investors and our editors right now.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.