RBI Directs Banks To Integrate DoT’s Tool To Curb Cyber Frauds

SUMMARY

The RBI advisory, which was issued on June 30, aims to crack the whip on cyber frauds by leveraging new-age technologies

The FRI enables relevant stakeholders to take additional measures for consumer protection to curb financial frauds undertaken by mobile numbers tagged as high risk

The National Quantum Mission is establishing a task force to enable banks to adopt the emerging technology for cybersecurity, financial modelling, and data analysis

Amid the growing spate of cyber crimes, the RBI has directed banks and payments banks to integrate telecom department’s (DoT) financial fraud risk indicator (FRI) into their systems.

The RBI advisory, which was issued on June 30, aims to crack the whip on cyber frauds by leveraging new-age technologies. Welcoming the move, DoT termed it a watershed moment.

“… This (RBI’s directions) is a watershed moment in the fight against cyber-enabled financial frauds and a testament to the power of inter-agency collaboration in safeguarding citizens in India’s growing digital economy,” the DoT said in a statement.

Launched in May, FRI is a risk-based metric that associates a mobile number with the degree of financial fraud. The numbers are flagged via data sourced from the government’s cybercrime reporting portal, DoT’s Chakshu platform, and intelligence shared by banks and financial institutions.

This enables relevant stakeholders to take additional measures for consumer protection to curb financial frauds undertaken by mobile numbers tagged as high risk. Banks and financial institutions can use FRI in real time to take preventive measures such as declining suspicious transactions, issuing alerts or warnings to customers, and delaying transactions flagged as high risk.

Not just this, API-based platform automates data exchange between banks and DoT’s digital intelligence platform (which has developed FRI) to enable real-time responsiveness and continuous feedback to refine the fraud risk models. The DoT said that the platform has already been deployed at fintech platforms such as PhonePe, Paytm and banks like HDFC Bank, ICICI Bank, among others.

“With UPI being the most preferred payment method across India, this intervention could save millions of citizens from falling prey to cyber fraud. The FRI allows for swift, targeted, and collaborative action against suspected frauds in both telecom and financial domains,” the DoT added.

Bolstering Quantum Security

Meanwhile, the National Quantum Mission (NQM) is reportedly establishing a task force to enable banks to adopt the emerging technology for cybersecurity, financial modelling, and data analysis.

As per The Hindu businessline, the task force will help banks develop guidelines to transition to quantum technologies and a draft of these norms is slated to be released in the next few months post government approval.

The report added that a long-distance quantum key distribution (QKD) network, one of NQM’s first milestones, will likely be ready by the end of July or early August.

For context, QKD utilises the principles of quantum mechanics to securely distribute cryptographic keys between two or more parties. Simply put, these keys can be used to encrypt and decrypt data, which cannot be easily broken into by potential future quantum computers.

“If there is a powerful enough quantum computer, it will break RBI’s current cybersecurity defences. Our whole financial system will go down. Earlier, the threat seemed far away, but in the last six months, it looks to be much earlier, around 2028 or 2029. China is at the forefront of this threat, having made major strides in quantum computing,” the chairman of NQM’s governing board and HCL cofounder, Ajai Chowdhry, said.

The Rising Tide Of Cybercrimes

The measures come amid a spurt in cybercrime cases. Earlier this year, minister of state (MoS) for home affairs Bandi Sanjay Kumar informed the Parliament that Indians lost INR 1,935.51 Cr to digital arrest scams in 2024. He also said that INR 107.21 Cr was lost to cyber frauds in the first nine months of FY25.

To crack the whip on online frauds, the Centre is said to have blocked lakhs of SIM Cards and IMEIs (International Mobile Equipment Identity), as well as thousands of WhatsApp accounts used to perpetuate online frauds.

Cyber attacks against Indian startups and organisations are also on the rise. A report by security firm CloudSEK estimated that India emerged as the second most targeted nation for cyber attacks globally, with 95 entities falling victim to data theft in 2024.