Digital payments revolution in India is hard to miss, with the transaction value ballooning a whopping 3,000 times to Rs 1,638 lakh crore in just 15 years, but constantly nagging frauds threaten to become the Achilles heel for Prime Minister Narendra Modi’s dream a ‘Digital India’. India has consistently recorded thousands of digital transaction frauds worth Rs 1 lakh or more in each of the last three financial years.
With regard to ATM / Debit card, Credit card and Internet banking transactions of over Rs 1 lakh, there were 1,367 frauds reported in FY 2016-17; 2,127 frauds in FY 2017-18; and 1,477 frauds in FY 2018-19, Minister of State for Finance Anurag Thakur said in a written reply in the Rajya Sabha. Digital payments frauds make up for a significant portion - up to half - of all bank fraud cases.
Experts said that some such risks are assumed normal in a transition phase, but at the same time, warn that the regulators need to be more proactive to minimise these instances. “India is ready to go digital and the risks of cybersecurity are also present in the advanced economies, so these risks are normal for India too,” Monish Shah, a Partner at Deloitte India, told Financial Express Online.
Yuvraj Chaudhary, a research analyst at Anand Rathi Securities, also broadly agreed. “India is getting ready for a change and during the transition, volatility remains in the picture,” he said. “However, RBI should intervene with stricter norms and framework to reduce the number of such cases,” Yuvraj Chaudhary told Financial Express Online.
The Reserve Bank of India has issued comprehensive instructions in respect of security and risk mitigation measures related to electronic/digital transactions, but it has not been able to bring down such cases below 1,000 per year. RBI has taken steps for securing card transactions, internet banking, electronic payments, ATM transactions and Prepaid Payment Instruments (PPIs). Further, RBI has also issued instructions limiting the liability of customers on unauthorised electronic banking transactions.
Customers still wary
Another issue that remains to be addressed is the adoption of digital payments by the public, which is rapid, but still lags far behind the implementation of systems and infrastructure by banks. “Trouble is on the adoption side, not on the deployment side,” Monish Shah said. “Digital adoption by customers have traditionally trailed digital deployment by banks by a big margin pushing payback periods. Given the initiatives made by all stakeholders in developing the digital infrastructure, one of the main reasons for low digital adoption remains awareness rather than access,” he added.
Though cybersecurity and digital payment fraud cases are concerns for the new module where India is heading, experts seem optimistic of a successful transition, calling it necessary for the overall development. National Payments Corporation of India (NPCI) did not respond to queries.