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Letter to BS: Banks should be careful while on-boarding new customers

They need to strengthen their fraud monitoring systems and cooperate with banks to prevent increasing number of card to wallet frauds

Business Standard  |  New Delhi 

RBI says bank frauds rose 15% in 2018-19, pegs amount at Rs 71,543 cr

-This refers to “Tools to detect fraud have to be far superior” (December 3). Frauds are rising in the banking sector, especially in the new age channels like internet banking, credit cards and mobile wallets. First, banks must remember that a lot of their new customers have recently come into the financial system and have low financial literacy and awareness. Many are sub-prime customers. They have leapfrogged from cash to electronic payments. Particular care must be taken while on-boarding them. Efforts must be made to increase their awareness about the use of these channels so they do not share account/card details with unauthorised persons.

Second, banks need to strengthen their IT systems as well as databases and constantly audit them. Operational risks emanating from data leaks from staff, both present and former, vendors, payment processors etc should be plugged.

Third, channel use and payment behaviour patterns of customers should be carefully watched before enhancing credit card limits. Telcos need to exercise much more care while agreeing to open accounts and change SIM cards. Last, the weak links are the mobile wallets. Many of them allow large inflows and outflows without verifying them. This compounds the problem as many of their customers are on-boarded with bare minimal KYC or no KYC. They need to strengthen their fraud monitoring systems and cooperate with banks to prevent increasing number of card to wallet frauds.

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First Published: Wed, December 04 2019. 22:57 IST
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