This initiative by FACE is noteworthy, especially as it seeks approval to become a self-regulatory organisation (SRO) for fintech lenders. The Reserve Bank of India (RBI) is expected to announce its decision soon, with FACE and the Digital Lenders’ Association of India both in the running to be recognised as an SRO. The establishment of an SRO will likely lead to more stringent industry oversight, promoting higher standards of operation and better consumer protection within the fintech sector.
The push for fintechs to join the CFCFRMS comes at a critical time. As digital transactions grow more common, the opportunities for cyber fraud have increased. The convergence of various financial entities— such as banks, non-banking financial companies, insurance providers, and payment services—has created more potential points of vulnerability. The CFCFRMS is designed to coordinate the efforts of all stakeholders, enabling action to block fraudulent transactions before they can be completed.
RBI’s New Platform to Combat Payment Frauds
In a parallel effort to bolster cybersecurity, the RBI is developing the Digital Payments Intelligence Platform (DPIP). This platform aims to use cutting-edge technology to detect and prevent payment fraud. A committee led by A P Hota, former CEO of the National Payments Corporation of India, is currently formulating recommendations for the DPIP, which is expected to upgrade the ability to share real-time data across the payment ecosystem. This initiative is especially important in addressing frauds where victims are tricked into making payments or divulging sensitive information.
Alarming Increase in Cyber Fraud Losses
The importance of these measures is empathised by recent statistics from the Ministry of Finance. Financial losses due to cyber fraud have more than doubled in the last fiscal year, rising to Rs 177.05 crore in FY24 from Rs 69.68 crore in FY23. This sharp increase underlines the growing threat posed by cybercriminals and the need for more robust security measures.
Public Awareness and Digital Payment Safety
While the rise in cyber fraud is concerning, a survey by the RBI offers some reassurance. According to the survey, 94.5% of digital payment users have not experienced fraud. However, the risk remains, especially in semi-urban areas, where fraud attempts are slightly more common than in metropolitan regions. The most prevalent form of fraud is vishing, or voice phishing, where criminals trick individuals into revealing sensitive information over the phone. Other common tactics include phishing emails, misuse of payment requests, and remote access scams.
As digital payments become increasingly integrated into everyday life, ensuring their safety is crucial. Initiatives like CFCFRMS and DPIP are essential in building a secure and trustworthy digital financial environment. By building up on fraud prevention measures, these platforms can help maintain public confidence and encourage wider adoption of digital payment systems.
