Reserve Bank of India (RBI) is poised to introduce new guidelines aimed at bolstering the country’s defenses against the rising tide of cyber crime. Sources familiar with the matter have revealed that the central bank plans to authorize banks to temporarily freeze accounts suspected of involvement in cyber crimes, streamlining the process to protect victims and curb financial losses.
The move comes in response to alarming statistics revealing that individuals have lost a staggering sum of nearly $1.26 billion to cyber fraud in financial institutions since 2021. With approximately 4,000 fraudulent accounts being opened each day, the threat posed by cyber criminals looms large over India’s banking sector.
Telephone scams, where fraudsters attempt to gain access to victims’ bank accounts and wallets, have become increasingly prevalent, contributing to the surge in financial losses. To combat this menace, the RBI is expected to empower banks to suspend accounts linked to such criminal activities without the need for victims to file police complaints initially.
Presently, banks can only freeze accounts after the police have registered a formal complaint, a process that can be time-consuming and allows perpetrators to swiftly empty accounts before any action can be taken. By enabling banks to proactively suspend suspicious accounts, the RBI aims to disrupt the flow of funds derived from cyber crimes.
The regulatory framework will be updated based on insights provided by the Indian Cybercrime Coordination Centre, a key agency in the fight against cyber fraud. Recent data from the agency reveals that 250,000 accounts involved in fraudulent activities have been suspended in the past three months alone, underscoring the scale of the problem.
However, challenges persist as thousands of fraudulent accounts continue to operate with impunity due to regulatory constraints. To address this issue, authorities plan to leverage information on miscreant account holders to identify and suspend additional accounts across different banks.
While these measures represent a significant step towards enhancing cybersecurity in the financial sector, experts emphasize the need for a centralized body dedicated to investigating cyber frauds. Such a body could play a pivotal role in coordinating efforts to combat cyber crime effectively.
