RBI ED Ajay Kumar Choudhary raises concerns over banking frauds

RBI ED Ajay Kumar Choudhary

Rising number of online frauds in the banking system is a matter of concern and to address the problem coordinated efforts from all related stakeholders and consumer awareness initiatives are required, a top Reserve Bank of India (RBI) official said.

"Multiple initiatives have been taken via RBI to educate people regarding online frauds. Data privacy law will help further to tackle online fake messages frauds," RBI Executive Director Ajay Kumar Choudhary said at conversation at Moneycontrol's inaugural India Fintech Conclave (IFC) on March 7.

The comments are significant in the backdrop of rising number of banking frauds and text-message based phishing attacks.

From February 27, 2023, to March 9, 2023, Mumbai police registered 80 first information reports over the creation of hundreds of fake bank accounts.

"KYC fraud to attach PAN card to the bank account has increased in Mumbai. In some cases, victims immediately disconnect the calls so the fraud sum is less. If the withdrawal limit is Rs 1 lakh per day, then the withdrawal seen was in the range of Rs 99,000 to Rs 99,999," told Balsing Rajput Dy. Commissioner of Cyber Crime, Crime Branch Mumbai to Moneycontrol.

Modus operandi

Mumbai Police issued an advisory on this on March 4, 2023. According to that modus of operandi the victim person receives an SMS like, "Dear customer your XXXX Bank A/C will be suspended Today due to incomplete KYC immediately update your PAN card Click Here https://xxxxxxxxx."

Then, fraudsters are sending such fake SMS with phishing link to the customers stating that their bank account is blocked/ disabled/suspended due to non updating of KYC/ PAN Card.

To update the KYC/ PAN, customers are guided to click on the URL Links. Once the Customer Clicks on the URL / Link provided by the fraudster, it will route to fake website in the name of bank and all the confidential details like Customer ID/ User ID, Password/ PIN & Mobile number are asked to fill in the said fake website.

As soon as the fraudster gets hold of confidential banking information of the customer, fraudsters steal money from bank accounts of the customers.

DCP Cybercrime told Moneycontrol that in the next 2-3 days arrests are possible in this case, "we are very close to it". He also advised the public to not click on any phisy links.

RBI response

Such attacks had prompted the RBI in October 2015 to issue a public advisory warning the public about emails sent by fraudsters impersonating the central bank.

In March 2022, RBI issued another advisory cautioning individuals against SMS, email, instant messaging, phone calls and OTP frauds. Despite all such warnings, there have been such recurring instances. As more people migrate to digital banking channels, the vulnerability to frauds increase.