India’s central bank, the Reserve Bank of India (RBI), is gearing up to implement stricter measures against cyber fraud by permitting banks to temporarily freeze suspect accounts, as reported by three sources to Reuters.
Recent internal government data reveals a staggering loss of nearly $1.26 billion to cyber fraud in financial institutions since 2021. The alarming figure underscores the urgent need for proactive measures to combat online crime. According to one source, approximately 4,000 fraudulent accounts are being opened daily, contributing to the escalating wave of cybercrime in the country.
A common tactic used by fraudsters involves contacting unsuspecting individuals by phone, seeking access to their bank accounts and wallets. This results in funds being siphoned off into the scammers’ accounts, leaving victims financially compromised.
To address this growing threat, the RBI is set to revise its guidelines, allowing banks to freeze accounts suspected of involvement in cyber crimes without the necessity of victims filing police complaints. This move aims to expedite the process of safeguarding affected individuals from further financial losses, as stated by two government sources familiar with the matter.
Presently, banks can freeze accounts only after a crime report has been filed with the police, a process that often takes days due to the overwhelming number of reported crimes. By enabling banks to suspend accounts promptly, the RBI hopes to disrupt the flow of funds obtained through cybercrime.
The proposed suspensions will specifically target accounts frequently misused for transferring illicit funds, based on information provided by the Indian Cybercrime Coordination Centre, an agency under the home ministry. Over the last three months alone, the government has suspended 250,000 accounts involved in fraudulent activities, indicating the scale of the problem.
The agency maintains a comprehensive database of misused bank accounts, electronic devices, mobile connections, and criminals, accessible to banks, law enforcement agencies, and telecom operators. Despite these efforts, thousands of fraudulent accounts continue to operate unchecked, as regulators and banks are often constrained without registered police complaints, noted one government source.
Efforts to combat cyber fraud will also involve leveraging the data of miscreant account holders to identify and suspend additional accounts held across various banks. This proactive approach aims to disrupt the network of cybercriminals and prevent further financial harm to individuals.
However, addressing the complexities of cybercrime requires a more centralized approach to investigation, according to a source familiar with the RBI’s thinking. Establishing a centralized body dedicated to investigating cyber frauds could streamline efforts and enhance coordination among various stakeholders in combating this pervasive threat.
In conclusion, the RBI’s planned measures signal a proactive stance in tackling cyber fraud in India. By empowering banks to freeze suspect accounts and enhancing collaboration with law enforcement agencies, the aim is to mitigate financial losses and bolster cybersecurity in the country’s banking sector
