RBI Asks Banks To Keep Track Of Domestic Money Transfers To Limit Frauds

In a bid to address the rising money scamming and frauds issue, the Reserve Bank of India has reportedly asked banks and all payment system operators to keep track of domestic money transactions made by customers.

As per the Economic Times report, the regulator has asked remitter banks to keep a record of the basic details such as name and address of beneficiaries of all cash pay-out services.

For cash pay-in services, remitting banks and business correspondents (BCs) will have to register the customer based on a verified cell phone number and a self-certified ‘Officially Valid Document (OVD)’ as set out in the Know Your Customer rules, the report added.

The news report also revealed that every transaction by a remitter will have to be validated by an Additional Factor of Authentication (AFA).

Reserve Bank of India governor Shaktikanta Das has urged banks to step up efforts against mule accounts and asked them to intensify efforts to curb digital frauds, based on the report.

The RBI previously set up a committee, comprising industry experts, to develop a digital public infrastructure platform led by Abhaya Hota, the first CEO of the National Payments Corporation of India (NPCI) to combat payment frauds, in June.

Meanwhile, in June, the central bank also organised its third global hackathon to develop tech-based solutions to address financial frauds called ‘HaRBInger 2024 – Innovation for Transformation’.

This new regulation from the RBI is expected to bring a significant impact on the growing online frauds in the country which has surged by 334% year-on-year (YoY) to 29,082 in the financial year 2023-24 (FY24), where the amount involved in these cases surged to INR 1,457 Cr in FY24 from INR 227 Cr in the previous year. 

The disclosures were part of the central bank’s annual report for the fiscal year ended March 2024 and covered instances involving cards and the internet. In contrast, online frauds in the country stood at 6,699 in FY23.

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