India's bank fraud needs a sensible response | Mint

(Bloomberg opinion) – Bank fraud in India has tripled in value. But this is only because some of the cases previously reported have been re -examined and appeared in the new data. However, more worrying than the boom in the amount, the increase in the number of payment fraud over the past few years. The solution lies in the reward of better security. Most of the stealing of banks occurs in the traditional way: via loans obtained using forged documents or bribes. However, clients are increasingly running the risk of being cheated if they make payments. According to the latest annual report of the central bank, more than half of the fraud has occurred in digital or card -based transactions, even if they were only 1.4% of the $ 4 billion scam. And these are just the situations where the amounts were 100,000 rupees ($ 1.160) or more. Thanks to a very popular smartphone-based payment network, much smaller values ​​are exchanged online for person-to-person and person-to-trade transactions. The so -called United Payment Interface is immediately available, 24/7 and usually places no costs for users. According to the separate government data, it is more than a million cases of bustle and annually. And that’s just what is reported. Unless they are very careful, the more affluent depositors do not even learn that they are bled slowly. The UPI growth, which handles more than $ 3 trillion a year, puts the system enormous pressure. It would attract criminals. Payments between -wares have warned clients about the different ways -from simple phishing attacks to sophisticated cloning of SIM cards -in which they can prey for scammers. Yet the banking system cannot look after its responsibility with a “buyer.” It needs stronger handrail. Anyone can set up a virtual ID to ask customers online. That freedom is welcome. But not if it appears that the bank account linked to “Amazon@Pockets” belongs to CKJXH Fiddbh, which does not look a real name. (However, the example is real, cited in the investigation of security researcher Karan Sainin.) Payment fraud takes place everywhere. Brazil’s Pix, which is next to India’s UPI as one of the fastest growing account-to-account transfer systems worldwide, is notorious for its ‘pix gangs’. What makes India’s case problematic is that scam has learned to exist with a large digital identity database, a biometry-based unique number and map through which 1.4 billion people determine who they are. It did not stop the theft theft. India’s banks are constantly bombarding customers with ‘Know-Your-Customer’ controls and asks again and again the same documents. Yet “mules” are still thriving. Accounts of unsuspecting customers are used by, among other things, online professionals located abroad to provide illegal access to casinos and cricket bets via cryptocurrencies. The Innovation Hub of the Reserve Bank of India came up with an artificial intelligence instrument called “Mulehunter.ai”. It now builds a prototype for an intelligence platform that covers all digital payments. However, it is not enough to simply identify suspicious transactions. As analysts pointed out, local money laundering laws do not allow banks to take rapid preventative steps or to restore money to their legitimate owners. Critical sectors of the economy cannot wait for legal changes. The share market regulator has decided to add a layer of security to investment funds that change online hands. As of October, a @valid maintenance on virtual payment handles will be mandatory for brokers, investment advisors, research analysts, merchant bankers and mutual funds to collect payments from investors. These are all stop gaps. In the end, New -Delhi must place the payment industry on a sustainable foot. Five years ago, UPI transfers to traders should be free for users to encourage digitization. The goal is realized. Although the government just denied last week that it has such plans, it’s time to allow banks and programs such as Google Pay and Phoneepe to recover their costs. In fact, the National Payments Corporation of India, the public monopoly running the network, must now face competition. Let private operators charge a basic transaction fee to offer security for institutional degree. The government can maintain its explicit incentives to promote cashless payments with low value at the bottom of the economic pyramid. As far as other customers are concerned, a competitive market with a high volume will keep a lid on fees, while providing a greater peace of mind. Banks will also sigh with relief. Payment is a utility they must provide to depositors so that they have the liquidity to borrow. Fraud becomes an expensive distraction. More from Bloomberg opinion: This column reflects the author’s personal views and does not necessarily reflect the opinion of the editorial or Bloomberg MP and his owners. Andy Mukherjee is a columnist in Bloomberg who covers industrial businesses and financial services in Asia. Previously, he worked for Reuters, The Straits Times and Bloomberg News. More stories like these are available on Bloomberg.com/opinion © 2025 Bloomberg LP