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As consumer banking frauds are on the rise, a Reserve Bank of India (RBI) group has suggested the use of public key infrastructure (PKI) in order to ensure a safe and secure payment system in the country. The central bank has launched a series of initiatives to improve technological infrastructure to support payment and settlement systems (RTGS) — which are termed as PKI — such as real time gross settlement, national electronic fund transfer (NEFT), etc.
Acknowledging that non-PKI payment systems such as magnetic ink character recognition (MICR) or non-MICR clearing, electronic credit system, credit and debit cards contributed 75 per cent in volume terms but only 6.3 per cent in value terms in 2012-13 in banking transactions, the group has called for using PKI to provide a safe, secure payment system and ensure legal compliance.
According to the report, banks, in their internet banking applications, should mandatorily create an authentication environment for password-based, two-factor authentication as well as a PKI-based system. Besides, banks should provide a PKI-based authentication system for online banking transactions as an optional feature for customers.
According to the report, the security of financial transactions — being executed from some remote locations and transmission of financial information over the air — is the toughest challenge that needs to be addressed jointly by mobile application developers, wireless network service providers and the bank.
The report also suggested that banks should move towards real time fraud monitoring system at the earliest. Moreover, there is a need for banks to provide easier methods (like SMS) for the customer to block his debit/credit card and get a confirmation to that effect after blocking the same.
The banks might consider introducing digital signature for large value payments, to start with for Real Time Gross Settlement transactions, said the report.
Besides, capturing internet protocol address as an additional validation check should be considered for electronic payment transactions.
Banks should not allow customers to make changes in their critical details such as phone numbers and addresses through phone banking. These should be done only through bank branches after verification, the report said.
