Digital banking has opened up new opportunities for expansion and increased efficiency. While it has streamlined processes, it has also minimized dependence on physical paperwork and manual transactions. Through digital banking platforms, businesses can now offer various services such as account management, payment processing, and loan applications. This has resulted in operational effectiveness and broadened their customer base by facilitating access to customers across geographical borders. However, this system comes with its share of fraud, and one needs to be very careful while dealing with it. To take care of these risks, the Reserve Bank of India (RBI) has come out with some guidelines to uphold the safety and security of banking operations:
In a speech recently in Paris, Swaminathan Janakiraman, deputy governor of RBI, mentioned some of these guidelines:
Multi-Factor Authentication: This process is required by all banks for all electronic payments and fund transfers, with exemptions for small-value transactions. Out of these methods, one of them at least needs to be dynamic or non-replicable, such as one-time password, biometric verification, or mobile device binding.
Risk Assessments: Banks need to do risk assessments on the safety, suitability, and appropriateness of digital payment products. Moreover, banks are given the onus to identify suspicious transactions and implement mechanisms to alert customers accordingly.
Zero Liability For Customers: In cases of losses owing to bank negligence or third-party breaches, customer protection regulations ensure zero liability for customers. In cases where losses are due to customer negligence, liability is restricted to losses occurring up to the point of reporting.
Digital Lending Guidelines: The RBI has introduced digital lending guidelines that have specified regulated entities to provide a key fact statement to the borrower before the contract execution.
Supervisory Framework: A framework for supervision that assesses business practices and controls over IT systems supports the regulatory mandates. The banking regulator also implements appropriate supervisory measures, including imposing business restrictions when necessary.
Cybercrime Reporting Portal: The government set up a National Cybercrime Reporting Portal along with a 24/7 helpline to help victims of cyber fraud report these incidents.
The RBI has taken several initiatives to promote a culture of financial wisdom and resilience through customer awareness and education campaigns.
