RBI cautions against frauds in the name of KYC updation

RBI

The Reserve Bank of India (RBI) on February 2 cautioned the public against frauds under the garb of know your customer (KYC) updation in the wake of continuing reports of customers falling prey to such frauds.

The modus operandi for such frauds usually involves customers receiving unsolicited communications, including phone calls, SMS or emails through which they are manipulated into revealing personal information, the RBI said.

Typically, such fraudsters seek account and login details or install unauthorized or unverified apps through links provided in the messages.

"Such communications often employ tactics of creating a false urgency and threatening of account freezing/blocking/closure, if the customer fails to comply," the central bank said, adding when customers share essential personal or login details, fraudsters gain unauthorised access to their accounts and engage in fraudulent activities.

The RBI's caution assumes significance in the backdrop of rising instances of bank fraud in the country in recent years. Frauds reported by banks declined to a six-year low during 2022-23, while the average amount involved in frauds was the lowest in a decade, according to the report on the trend and progress of banking in India released by the Reserve Bank of India on December 27.

In the first half of the year 2023-24, the number of frauds reported rose over the corresponding period a year ago and the amount involved was only 14.9 percent of the previous year’s amount based on the date of the occurrence of frauds, said the report.

The RBI report added that the average amount involved in the cases declined during 2022-23 with a majority of cases being card-related transactions or internet-related frauds. The number of fraud cases reported by private banks accounted for 66.2 percent of the cumulative total figures.