Finance Ministry suggests tighter cyber norms

Finance Ministry suggests tighter cyber norms

Subject :Economy

Section: Monetary Policy

Context: Finance Ministry suggests tighter cyber norms; closure of ‘mule’, inert bank accounts

More about the news:

• During a recent meeting organized by the Finance Ministry in India, critical measures were discussed to address the rising concerns of online financial frauds and bolster cyber security.
• Chaired by Financial Services Secretary Vivek Joshi, the meeting was prompted by a recent incident at UCO Bank involving erroneous money transfers totaling Rs 820 crore.
• Among the key suggestions were the appointment of nodal officers to tackle cyber security issues, the closure of ‘mule’ bank accounts frequently exploited by fraudsters, and heightened monitoring of dormant accounts displaying sudden activity.
• Joshi highlighted the need for restrictions on withdrawals from such active dormant accounts.
• The meeting emphasized the importance of increased information sharing between government agencies, advocating for a common platform like the ‘Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS).
• Telecom Secretary reported significant actions, including blocking 70 lakh suspicious mobile numbers and Rs 900 crore blocked since 2021 through the Indian Cybercrime Coordination Centre (I4C).
• Discussions also touched upon reducing response times by banks after fraud complaints, enhancing due diligence, and specific recommendations from the IT Ministry, such as detailed KYC norms for merchants.
• The meeting showcased a collaborative effort, involving representatives from various government departments, regulatory bodies, and financial institutions, to strengthen the nation’s defenses against digital payment frauds.

What are the different types of Digital Payments:

• NEFT (National Electronic Funds Transfer):
  • An electronic payment system employed for the transfer of funds from one bank account to another, NEFT operates on a deferred net settlement basis. This implies that transactions are processed in batches throughout the day.
• RTGS (Real-Time Gross Settlement):
  • A payment system designed for the real-time processing of large-value transactions, RTGS ensures immediate and gross settlement of funds.
• IMPS (Immediate Payment Service):
  • IMPS is an instantaneous payment system that empowers customers to transfer funds in real-time, 24/7, providing swift and seamless financial transactions.
• Unified Payments Interface (UPI):
• Developed in India by the National Payments Corporation of India (NPCI), UPI serves as an instant payment system facilitating peer-to-peer and person-to-merchant transactions between banks. This interface is particularly utilized on mobile devices for the instantaneous transfer of funds between two bank accounts.
• In terms of UPI transactions, there was a remarkable surge of 427% in volume between 2020 and 2022. In May 2023, NPCI recorded a substantial 9.41 billion UPI transactions, amounting to Rs 14.89 trillion.