RBI asks banks to beef up security for e-transactions

The Reserve Bank of India (RBI) has asked banks to strengthen their payment infrastructure for safety in automated teller machines (ATM) and point of sale terminals. It has set a two-year timeline for banks to upgrade the systems beginning with implementation of fraud risk management services by September 30, 2012.

In accordance with the suggestions by the working group appointed by the regulator in March this year, RBI has also asked for better sourcing and monitoring process at the merchant level by the same time frame. The regulator has directed banks to migrate to EMV chip cards and PIN-based cards by June 30, 2013.

The central bank has also said that Aadhaar-based biometric identification instead of the personal identification number (PIN) should be used for all card transactions which include transactions in ATM and point of sale transactions.

“The need for a complete migration to EMV Chip and PIN-based cards could be considered based on the progress of Aadhaar in about 18 months,” RBI said.

It is, however, clarified that banks are free to migrate to EMV Chip and PIN-based technology, depending on their commercial judgment and decision taken by their respective boards, the regulator added.