Lok Sabha Question No. 25 (STARRED), answered on 2017-02-03
Subject: Online Frauds
Ministry: FINANCE
Asked by: LAXMAN GILUWA, GAURAV GOGOI

## GOVERNMENT OF INDIA

## MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

STARRED QUESTION NO.*25

TO BE ANSWERED ON THE 3 RD  FEBRUARY 2017/MAGHA 14, 1938 (SAKA)

## ONLINE FRAUDS

*25 : SHRI LAXMAN GILUWA:

SHRI GAURAV GOGOI:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has set up the Central Fraud Registry for investigating the frauds committed in the banks and through ATM/Debit/Credit cards and if so, the details thereof;
- (b)  whether  there  has  been  a  spurt  in  financial  frauds  using  mobile  phones,  internet banking and digital transactions etc. in the past few months particularly during and after demonetization and if so, the details thereof;
- (c) the number of fraudulent transactions detected by the above Registry and the result of the investigation carried out thereon; and
- (d) the steps taken/being taken by the Government to ensure foolproof e-transactions and also protect customers from the said frauds?

## ANSWER

THE MINISTER OF FINANCE ( SHRI ARUN JAITLEY )

- (a) to (d) : A Statement is laid on the table of the House.

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Statement as referred in reply to part (a) to (d) of Lok Sabha Starred Question No. *25  for  answer  on  03.02.2017  regarding  Online  Frauds  tabled  by  SHRI  LAXMAN GILUWA and SHRI GAURAV GOGOI, MPs.

(a) to (d): In January 2016, Central Fraud Registry (CFR) has been operationalized at Reserve Bank of India (RBI) as searchable online central fraud data base for use by the banks  in  respect  of  frauds  above  Rs.1  lakh.  The  CFR  contains  critical  aspects/ information, including modus operandi in respect of frauds as reported by the banks and select Financial Institutions (FIs). This data base is helpful to the banks not only during credit decisions but also to know about fraud in various areas of  banking including cyber frauds, ATM/debit/ credit card and internet banking.

All the banks/select FIs have been given access rights through user ids and password. The CFR helps the banks and FIs in detecting frauds in their organisation based on the frauds reported by other banks/FIs in respect of any particular constituent of the bank. It is  the  primary  responsibility  of  the  banks/FIs  to  detect  the  fraud  with  or  without  using CFR and comply with RBI regulation with regard to classification and reporting of frauds.

RBI has given the following details of fraud reported in credit cards/ ATM/Debit Cards and Internet Banking categories for the first three quarters of 2016:

| Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   | Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   | Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   | Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   | Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   | Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   | Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   | Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   | Details of frauds reported in Credit Cards/ ATM/Debit Cards and Internet Banking Categories (Amount in Lakh ₹)   |
|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|
| Quarter Year 2016                                                                                                | Credit Cards                                                                                                     | Credit Cards                                                                                                     | ATM/ Debit Cards                                                                                                 | ATM/ Debit Cards                                                                                                 | Internet Banking                                                                                                 | Internet Banking                                                                                                 | Total (All three categories)                                                                                     | Total (All three categories)                                                                                     |
|                                                                                                                  | No. of Frauds                                                                                                    | Amount                                                                                                           | No. of Frauds                                                                                                    | Amount                                                                                                           | No. of Frauds                                                                                                    | Amount                                                                                                           | No. of Frauds                                                                                                    | Amount                                                                                                           |
| June                                                                                                             | 1927                                                                                                             | 714.94                                                                                                           | 1328                                                                                                             | 611.76                                                                                                           | 18                                                                                                               | 60.6                                                                                                             | 3273                                                                                                             | 1387.3                                                                                                           |
| September                                                                                                        | 1626                                                                                                             | 733.59                                                                                                           | 1511                                                                                                             | 760.08                                                                                                           | 19                                                                                                               | 52.7                                                                                                             | 3156                                                                                                             | 1546.37                                                                                                          |
| December                                                                                                         | 1004                                                                                                             | 708.25                                                                                                           | 1225                                                                                                             | 528.96                                                                                                           | 31                                                                                                               | 44.88                                                                                                            | 2260                                                                                                             | 1282.09                                                                                                          |
| Total                                                                                                            | 4557                                                                                                             | 2156.78                                                                                                          | 4064                                                                                                             | 1900.8                                                                                                           | 68                                                                                                               | 158.18                                                                                                           | 8689                                                                                                             | 4215.76                                                                                                          |

The measures initiated by the RBI to prevent cyber related frauds is given below :

- (i) RBI has issued circular on 'Skimming of ATM/Debit/Credit Cards' ,vide DBS.Co.FrMC.No.17968/23.10.001/2005-06 dated June 26, 2006, advising banks to  take  various  preventive  measures  to  combat  frauds  relating  to  skimming  or duplicating  of  credit  cards.  The  banks,  inter  alia,  were  also  advised  to  advise customers not to reveal  PIN  in  response  to  requests  received  through  e-mail,  to

periodically verify the transaction history to ensure its correctness, if any unauthorized  transaction  was  observed  it  should  be  immediately  reported  to  the bank and inform the bank if the card is lost or stolen.

(ii) Caution advices are also issued by RBI as and when necessary for preventing and  controlling  the  frauds.  Three  caution  advices  have  been  issued  recently  in connection with (i) Fraud in Mobile Application (CA No. 4097) (ii) ATMs-Large value cash shortages-Malware attacks (CA No. 4087) and (iii) Fraud-Letter of Comfort Buyers Credit -Misuse of SWIFT messaging system CA No.(4094).

(iii) RBI has reiterated its instructions vide circular DBS.CO.CFMC.BC.No.6/23.04.001/2016-17 dated September 28, 2016 on funds transfer requirement received through email/fax messages. Banks were advised to strengthen the mechanism put in place by them in this regard and also to adhere to it  strictly,  including  contacting  the  customer  over  phone  at  his  registered  phone number to ensure genuineness of request of the customer.

- (iv) In order to focus more attention on IT related matters, Reserve Bank of India has set up a Cyber Security and IT Examination (CSITE) Cell within its Department of Banking Supervision in 2015. RBI has issued a comprehensive circular on Cyber Security Framework in Banks on June 2, 2016 covering best practices pertaining to various aspects of cyber security. The banks are required, among other things, to have a cyber-security policy, cyber crisis management plan, gap assessment vis-àvis  the  baseline  requirements  indicated  in  the  circular,  monitoring  certain  risk indicators in the area, report unusual cyber security incidents within 2 to 6 hours, ensure board involvement in the matter and robust vendor risk management. The progress of banks in scaling up their cyber security preparedness is monitored.
- (v) RBI  carries  out  IT  Examination  of  banks  separately  from  the  regular  financial examination  of  banks  from  last  year.  This  report  has  a  special  focus  on  cyber security. The reports have been issued to the banks for remedial action. RBI has also  set  up  Cyber  Crisis  Management  Group  to  address  any  major  incidents reported including suggesting ways to respond to and recover from the incidents. Department  of  Banking  Supervision  also  conducts  cyber  security  preparedness testing among banks on the basis of hypothetical scenarios with the help of Indian Computer  Emergency  Response  Team  (CERT-In).  RBI  also  has  set  up  an  IT
- subsidiary, with a focus, among other things, on cyber security within RBI as well as in regulated entities.
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