RBI to issue cyber fraud SOP after refining draft over next four weeks

Deputy Governor Swaminathan J says the RBI has submitted a draft standard operating procedure to the Supreme Court and will refine it before issuing it to regulated entities.

The Reserve Bank of India (RBI) has submitted a draft standard operating procedure (SOP) to the Supreme Court for dealing with cyber frauds, including digital arrest scams and mule accounts, and will fine-tune it over the four-week period granted by the apex court before issuing it to regulated entities, Deputy Governor Swaminathan J said at the post-monetary policy press conference on Wednesday.

 

"A draft SOP has already been prepared and submitted to the Supreme Court. The court passed an order yesterday and has given the RBI four weeks. We will fine-tune the SOP in light of the Supreme Court's observations and issue it soon," Swaminathan said.

 

 

The Supreme Court on Tuesday directed the RBI to put in place an SOP for banks to deal with cyber frauds, including digital arrest scams and mule accounts, within four weeks. The SOP is expected to lay down procedures for placing a temporary hold on debits from suspected accounts, establishing a grievance redressal mechanism, restoring funds to victims wherever feasible, and creating public awareness about these safeguards.

 

While hearing suo motu proceedings on the rising incidence of cyber frauds involving digital arrest scams, a Bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V. Mohan directed the Centre, state governments and other authorities to strengthen measures to curb such scams.

 

Swaminathan said the RBI has already undertaken several initiatives to prevent cyber frauds, while regulated entities have stepped up customer awareness campaigns.

 

"There are significant efforts being made by the RBI to prevent frauds from occurring. Consumer awareness is also being enhanced by both the RBI and regulated entities. Wherever people have unfortunately fallen victim to fraud, law-enforcement agencies and regulated entities will make the best possible effort to restore their money to the extent feasible," he said.

 

The deputy governor also highlighted the RBI's recently introduced compensation framework for victims of small-value digital banking frauds. Under the framework, victims, including individuals and sole proprietors, who suffer losses of up to Rs 50,000 in fraudulent electronic banking transactions will be eligible for compensation of up to Rs 25,000, subject to specified conditions. The compensation will be equivalent to 85 per cent of the net loss or Rs 25,000, whichever is lower, and can be availed of only once in a lifetime.

 

To curb the misuse of mule accounts for layering and diversion of funds in cyber frauds, the RBI has also rolled out MuleHunter.AI, an artificial intelligence- and machine learning-based solution for detecting mule accounts. The platform is currently operational across 26 banks and is being scaled up further. The central bank has also issued advisories requiring banks to strengthen systems and controls to prevent and detect cyber-enabled frauds and the misuse of banking channels through suspected mule accounts.