Security breach scare: RBI tightens noose around cyber fraud, asks banks to replace cards

Reserve Bank of India (RBI) has tightened its noose around cyber fraud and security breach in the banking system with a rise in such incidents.

In a draft circular on Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions, RBI had said that banks must put in place appropriate systems and procedures to ensure safety and security of electronic banking transactions carried out by customers. It had also said that the systems and procedures in banks must be designed to make customers feel safe about carrying out electronic banking transactions.

Banks must ask their customers to mandatorily register for alerts for electronic banking transactions, the RBI draft had said. Also, it said customer will not be liable if there is fraud/ negligence on the part of the bank and also if there is third party breach where the fault lies neither with the bank nor with the customer but lies elsewhere in the system.

Apart from this, RBI has its guns trained not only on cyber related attacks but on the overall rising fraud risks in the system and now has a special team dedicated to ensure that these frauds can be curtailed and resolved more efficiently. Further, RBI is also looking at reviewing and expanding the scope of the banking Ombudsman scheme that allows consumers to escalate their complaints to this consumer protection watchdog. 
 

Data from RBI showed that as of July 31, 2016, there were 697.22 million debit cards in circulation in the country.

With the recent security breach detected by some banks,  The Hindu reported that RBI has asked banks to replace debit cards whose security is suspected to have been compromised after being used in some automated teller machines (ATMs).

Recently, private sector lender Axis Bank recently informed RBI that it had experienced a cyber attack, while the State Bank of India said it was re-issuing over 600,000 debit cards because of a potential security breach. It is anticipated that about 3.2 million debit card may have come under threat.

In the recent past, RBI has said that their focus is on tackling cyber crime at a time when digital transactions have been on a rise. S S Mundra, deputy governor, RBI has also said earlier that with increasing concerns around cyber security, last year on a pilot basis they started to inspect few banks separately on cyber security. "This year the coverage is being expanded to more than 30 banks and we intend to cover each bank going forward," Mundra had said.