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In news: RBI has given specific instructions to the banks that in case of online frauds or unauthorised transactions, the entire responsibility of making it good lies on the banks only. It is nobody’s case that a hapless customer who goes to do an online transaction on laptop or mobile and gets trapped into a system whereby he gets cheated and finds that the money has been taken away by some online fraudulent hackers or unscrupulous elements. So the entire responsibility of secured online transactions has been given to banks alone.
The categories of possible online frauds are
Where a physical mode is required to be present like cheques, credit or debit card
Where there is no physical document- like NEFT, online transactions etc.
In both of them, if there is any unauthorised transaction and the customer who has been the victim, has to intimate his banker within 3 days, then the total loss will be borne by the banker. If reports from 4-7 days, then some limited liability on the customer depending upon the kind of account maintained in bank. If reported after 7 days, then the policy will be according to bankers’ board, hosted on website.
Shared responsibility: This has come as big relief to customers. But he has to be alert all the time. If the loss is due to negligence of the account holder (eg: sharing payment credentials, PIN numbers etc.), the customer will bear the entire loss until the unauthorised transaction is reported to the bank. Hence, although the responsibility of covering the losses has been given to the bank, banks have been given instructions to put their system in place. Thus it is a two way call.
Are the banks ready to build the huge backend infrastructure?
Now the banks have to heavily invest into IT infrastructure and keep on educating their customers again and again. They have to tell the customers that bankers never call for their PINs or personal details which are linked to their bank account.
All the banks and some regulatory bodies have been reaching out to customers through advertisement, public broadcasting and various other means that it never seeks such information and that such fraudulent mails are given from Fake email-IDs. In case when a fraudulent transaction takes place, in rural areas and urban areas, people don’t check their messages too often. But now online banking, credit and debit card is being used after demonetisation. So when the customers receive such SMS, they should carefully scrutinise the same.
RBI speaking about this speaks about the enormity and gravity of the situation. According to RBI data, in April, the digital transactions were 843.5 million. (Digital transactions include transactions conducted via credit and debit cards, unified payments interface (UPI), unstructured supplementary service data (USSD), prepaid payment instruments (PPIs), internet banking and mobile banking.)
To take online banking further, it needs more protection. In GST, the dealer cannot pay cash or cheque for tax if amount is beyond Rs. 10,000, this has to be done online only.
Income tax has made change- any expenditure incurred for payment of purchases, cannot be made in cash if exceeding Rs. 10000 per person per day. So all the transactions are done online through cheques, NEFT, RTGS, etc. This makes cash restricted.
Any person who receives cash of Rs. 2,00,000 or more in a single day against the transaction, penalty would be against the extent of that cash amount. When the cash transactions are being restricted more and more emphasis on electronic payment, mostly the businesses prefer latter mode. The Cyber security goes hand in hand with these. India has world class software engineers, R&D persons who are working on global projects in areas of banking, finance, cyber security. So there is a need to make use of those resources for India’s domestic purposes.
Lot more confidence building measures are needed looking at the growing business transactions and household transactions.
RBI said to the banks to update the contact number of the customer with each bank account. Where the customer is not linking their contact number, then banker is free to not allow him online facilities. It has also said that a mandatory SMS facility has to be started whereby the customers will have to respond through the SMS. For this, the bankers have to update their IT infrastructure as when the SMS goes from the bank, how customers can respond to those SMS is a technical challenge as it is made through a software and not a personal mobile number.
When the entire focus of government, industry and trade is digital so that there is transparency, ease of doing business is ensured, so the confidence of doing business online should also be ensured.
Every transaction of purchase and sale will done through bankers. So the bankers have to use the cybersecurity infrastructure very strongly and educate their customers.
Also, there can be an apex level authority which will only deal with issues of cyber security.
If India wants to take leap from cash to less cash, it needs to be ensured that confidence is maintained.
Connecting the dots:
Digital transactions is pinned to be future of India’s pillar of growth story. What measures should be taken by consumers, businesses and cyber experts to ensure safety of such transactions?