In an effort to combat digital fraud and expedite issue resolution, banks are gearing up to establish a shared negative registry of fraudsters. This innovative approach aims to provide real-time access to information for all banks, preventing fraudulent activities and enhancing the speed of problem-solving. Discussions about the proposed portal have commenced with the Reserve Bank of India (RBI), signaling a collaborative approach to safeguarding the financial ecosystem.
Seamless Connectivity and Enhanced Tracing: Curbing Digital Fraud
Banks intend to leverage the common negative registry to streamline communication in cases of fraud, enabling a swift response to halt and trace funds being transferred across multiple accounts. One senior bank executive noted that many instances of digital fraud involve funds being dispersed among various banks and financial entities, making the tracing process challenging and leading to delays. The envisioned portal is poised to address this issue, facilitating more effective fraud prevention and fund tracking.
Synchronization for Comprehensive Resolution: Aligning ODR and UDIR
The development process involves aligning the Online Dispute Resolution (ODR) framework by the RBI with the Unified Dispute and Issue Resolution (UDIR) offered by the National Payments Corporation of India. This synchronization is crucial for establishing a comprehensive resolution platform that encompasses various aspects of fraud prevention, detection, and resolution.
Statistical Insights: Fraud Incidents and Monetary Impact
Statistics from the financial sector reveal the substantial impact of fraud incidents. During the fiscal year 2022-23, public sector banks reported 3,405 instances of fraud involving a total of ₹21,125 crore, while private banks reported 8,932 cases amounting to ₹8,727 crore. These figures pertain to cases of fraud valued at ₹1 lakh and above.
Standard Operating Procedure (SOP): Strengthening the Fraud Prevention Framework
A standardized operating procedure (SOP) is under development, guided by the RBI‘s directives. This SOP is designed to ensure the timely interception of unauthorized transactions, thereby enhancing the effectiveness of the fraud prevention system. By establishing consistent processes across stakeholders, the goal is to accelerate the resolution of fraudulent transactions.
Roles and Responsibilities: Enhancing Transaction Security
The SOP is expected to outline clear roles and responsibilities for both remitter and beneficiary banks. This approach is intended to prevent the downstream flow of funds from victims’ accounts. Additionally, the SOP will cover procedures for refunding funds to victims and addressing transactions involving third-party accounts.
RBI’s Active Role: Migration of Fraud Reporting Module
Recognizing the need for streamlined reporting and enhanced efficiency, the RBI has taken an active role in the process. The fraud reporting module, a critical component of fraud management, is being transitioned to the Reserve Bank’s advanced supervisory monitoring system known as Daksh. This migration underscores the RBI’s commitment to proactive oversight and management of fraud incidents.
Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consider consulting a financial professional before engaging in algorithmic trading.