The Digital Lenders Association of India (DLAI) is in the advanced stages of developing a 'fraud repository' that will help its fintech members, including lenders, financial service providers, and payment firms, to access and understand various types of financial frauds within the ecosystem.
“We are in talks with a leading tech service provider and are in the advanced stage of finalising a fraud repository. This will be helpful for fintech lenders, NBFCs, payment companies, and other stakeholders,” said Jaitinder Handoo, CEO of DLAI.
Fraud repository is an attempt to pool available information from multiple players in an organised fashion, Handoo added.
As of now, different fintech players have different exposure to fraudulent activities, but they are in silos. The repository is a common sectoral infrastructure which will organise the information, in compliance with the DPDP Act, in a manner that members from across the eco-system can gain from the comprehensive pool of information.
The Digital Lenders Association of India (DLAI) is a fintech industry body founded in 2016, focusing on two primary functions. Firstly, it plays a crucial role in the development of the sector by facilitating its members in complying with RBI regulations, engaging in the consultation process, and representing the industry's voice on relevant platforms. Secondly, DLAI emphasizes client protection by fostering adherence to regulatory standards and ensuring ethical practices within the fintech ecosystem.
DLAI’s initiative aligns with the increasing pressure from the Reserve Bank of India (RBI) and the government to curb financial fraud and ensure a high level of regulatory compliance.
In fact, PM Modi during his address at the Global Fintech Fest said that the regulators need to take bigger steps to prevent cyber frauds.
"We need to stop cyber fraud and encourage digital literacy through significant steps," declared Prime Minister Narendra Modi in a pivotal address at the Global Fintech Fest in Mumbai. Modi’s call to action underscores a critical focus on cybersecurity as the cornerstone of India’s fintech sector.
The Indian Cyber Crime Coordination Centre (I4C) reported earlier this year that agencies managed to block about Rs 1,127 crore of fraudulent transactions.
The I4C head Rajesh Kumar cited that over 1,100 complaints were lodged against illegal loan apps in the past year alone. The financial losses reported by victims of these apps have crossed the Rs 200-crore mark, with the average victim losing between Rs 10,000 and Rs 50,000.
Also Read: A sneak peek into I4C: Tackling India’s rising fintech frauds, one mule account at a time
DLAI was among the three organisations that applied for SRO-FT and is awaiting the RBI nod on the same. Reserve Bank on August 28 said it has decided to recognise the Fintech Association for Consumer Empowerment (FACE) as a self-regulatory organisation in the fintech sector (SRO-FT).
Talking about SRO-FT recognition Handoo said that DLAI’s application is in-process. “Granting recognition to SRO-FT is a welcome step and will be beneficial for the sector. We have also applied for the same. Going by what the Governor announced stating that there were three applicants, and while one has been recognised initially the other two are at different stages. The status of our application is “in-process,” he added.
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