Cyber Security and Fintech | Department of Financial Services | Ministry of Finance

As the Financial Services sector continues to advance technological innovations, financial fraud in India is also on the rise, with scammers employing various deceptive tactics to obtain sensitive information and money from individuals. In response, regulators are introducing new cybersecurity standards to balance growth with governance. Below are some common methods of these scams:

• KYC Fraud: Scammers impersonate as Bank officials or government representatives, target customers through deceptive text messages or calls to lure into providing personal / sensitive / financial information under the false pretext of updating KYC details.

• Customer Care Fraud: Scammers manipulate search engine results to display fake customer care numbers. When users search for helpline numbers of legitimate companies or organizations, they may end up contacting these fraudulent numbers and unknowingly share sensitive information.

• Lottery Fraud: Victims receive Fake notifications claiming they've won a lottery, but they need to pay fees or provide personal details to claim the prize, resulting in financial loss.

• Card Fraud: Fraudster posing as Bank representative, may call & ask for sharing Card Number, Expiry Date, CVV, PIN, OTP etc. under false pretext or fabricated scenarios.

• Loan Fraud: Fraudster create unscrupulous Loan Apps offering easy & instant loans without checking credit history / scores. Upon downloading the app, users are prompted to grant multiple permissions, including remote access. By obtaining full control of the user's device, fraudsters can carry out fraudulent activities.

• UPI Fraud: Fraudsters masquerade as legitimate entities or known individuals, enticing users with attractive schemes, refunds, offers, or urgent messages. They persuade users to make fund transfers or payments to unknown UPI IDs or disclose sensitive UPI credentials such as UPI ID, PIN, OTP, etc., enabling them to carry out fraudulent transactions.

• Electricity Bill Scam: Fraudster sends fake message threatening disconnection of services due to unpaid bills. Messages may also contain fake contact number of electricity officer.

• Task Based Job Fraud: Scammers approach individuals, enticing them with lucrative work-from-home opportunities promising substantial earnings with minimal effort. Victims are convinced to invest initially, but end up losing significant amounts of money due to subsequent demands for higher payments.

• Digital Arrest Fraud: Cybercriminals posing as police officials have been alleging unsuspecting individuals in fictitious money laundering cases, manipulating and extorting money by threatening individuals with fake cases and interrogation.

• Investment Frauds and Get Rich Quick Schemes: Fraudsters often target on unsuspecting individuals with promises of quick and high returns in a short time period. In reality, they aim to defraud investors, causing financial losses.

Best practices to mitigate financial frauds / scams:

•   Never trust unknown callers relying solely upon the voice.
•   Avoid oversharing information on social media platforms.
•   Refrain from making immediate payments in response to urgent or threatening messages.
•   Do not trust unexpected messages from unknown sender & avoid clicking on unknown link.
•   Contact the Bank or lending institution directly through official channels to confirm the authenticity of such messages/charges.
•   Avoid searching for customer care or helpline numbers on search engines. Instead, rely on official websites or apps of the company or organization for authenticated customer care contact details.
•   Never share sensitive / financial information like card number, expiry date, CVV, PIN, OTP or Financial credentials with anyone.
•   Enter UPI PIN / scan QR code only to make payment, not for receiving money.
•   Never approve payment / fund transfer request from unknown UPI ID.
•   Always refer Customer Care or Helpline number provided in original electricity bill & pay bills from authorised / official website / App.
•   Do not trust or respond to unsolicited messages on social media or instant messaging platforms like Telegram, WhatsApp etc., which promise easy money in exchange for completing online tasks.
•   Always verify legitimacy of job offers or investment opportunities etc. from official & trusted sources.
•   Be wary of unsolicited calls claiming legal issues or urgent threats, especially if they demand immediate action or money transfer.
•   If threatened with legal action, verify with the relevant authorities, ask for the Official notice & directly communicate with the local police station before complying with any instructions or transferring funds.
•   Always ask for the official notice, other necessary details etc. & directly communicate with the local police station for verification / clarification.

Government of India (GoI) Initiatives to counter Cybersecurity in Indian Financial Services Sector:

The Indian government has implemented several initiatives to strengthen cybersecurity in the financial services sector. Some key measures are given below:

• National Cyber Security Policy: Established in 2013, this policy provides a framework for protecting critical information infrastructure and enhancing cybersecurity awareness.

• CERT-Fin (Computer Emergency Response Team for Financial Sector): Launched in 2017, this specialized unit works towards strengthening cyber security in the financial sector.

• RBI Cybersecurity Framework: The Reserve Bank of India (RBI) issued comprehensive guidelines for financial institutions to enhance their cybersecurity posture. RBI’s Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices focuses on IT Governance.

• Cyber Swachhta Kendra: A botnet cleaning and malware analysis center that provides free tools to citizens and organizations to secure their systems.

• National Critical Information Infrastructure Protection Centre (NCIIPC): Established to protect critical information infrastructure in various sectors, including banking and finance.

• Information Technology Act, 2000 (amended in 2008): Provides legal framework for addressing cybercrime and electronic commerce.

• Cyber Surakshit Bharat Initiative: A programme to educate & enable the Chief Information Security Officers (CISO) & broader IT community to address the challenge of cybersecurity.

• Indian Computer Emergency Response Team (CERT-In): The national agency for responding to computer security incidents.

• Digital Personal Data Protection (DPDP) Act 2023: The DPDP Act provides for the processing of digital personal data in a manner that recognizes both the rights of the individuals to protect their personal data.

National Cybercrime Reporting Portal (NCRP):

The National Cybercrime Reporting Portal (NCRP) portal is an initiative of Government of India to facilitate victims/ complainants to report cybercrime complaints online. The portal under Indian Cybercrime Coordination Centre (I4C) was launched on 30.08.2019. This portal caters all types of cybercrime complaints including complaints pertaining to online Child Pornography (CP), Child Sexual Abuse Material (CSAM) or sexually explicit content such as Rape/Gang Rape (CP/RGR) content and other cybercrimes such as mobile crimes, online and social media crimes, online financial frauds, ransomware, hacking, cryptocurrency crimes and online cyber trafficking. The portal also provides an option of reporting an anonymous complaint for reporting online Child Pornography (CP) or sexually explicit content such as Rape/Gang Rape (RGR) content.

Website: https://cybercrime.gov.in/

Citizens can also register their complaints through the National Cybercrime Helpline number 1930. Complainants can call on the helpline number 1930 and provide few mandatory details like Name, Mobile Number, Address, Transaction details etc. and after receiving acknowledgement number the complainants are needed to make a formal complaint on the portal (https://cybercrime.gov.in/) within 24 hrs using the acknowledgement number received on SMS.

Chakshu facility on Sanchar Saathi portal:

Chakshu facilitates citizens to report the suspected fraud communications with the intention of defrauding telecom service users for cyber-crime, financial frauds, non-bonafide purpose like impersonation or any other misuse through Call, SMS or WhatsApp. Few examples of suspected fraud communications are communication related to Bank Account / Payment Wallet / SIM / Gas connection / Electricity connection / KYC update / expiry / deactivation, impersonation as Government official / relative, sextortion related etc.

Website: https://sancharsaathi.gov.in/sfc/

Fintech in India: An Overview:

With an impressive fintech adoption rate of 87%, significantly higher than the global average of 64%, India is leading in fintech inclusion. This growth has been driven by several factors, including the strong foundation laid by the Jan-Dhan, Aadhaar, and Mobile (JAM) trinity, the Unified Payments Interface (UPI), and various supportive regulatory frameworks. The COVID-19 pandemic also accelerated the adoption of digital financial services, bringing more people into the formal financial system.

Digital lending and payments are particularly dominant, with the digital lending market valued at $270 billion in 2022, expected to grow at a CAGR of 22% to reach $1.3 trillion by 2030. The digital payments sector has seen exponential growth, with UPI transactions rising from 4.5 million in January 2017 to 10 billion in January 2023. The total value of digital payments is projected to reach $100 trillion by 2030.

Government initiatives have played a crucial role in fostering this growth. The establishment of the International Financial Services Centre (IFSC) at GIFT City is poised to become a central hub for fintech activities, aiming to integrate India's economy with the global financial ecosystem.

Source: Economic Survey 2022-23

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