Lok Sabha Question No. 2325 (UNSTARRED), answered on 2018-12-26
Subject: Fraud in Digital Transactions
Ministry: ELECTRONICS AND INFORMATION TECHNOLOGY
Asked by: ADHIR RANJAN CHOWDHURY

## GOVERNMENT OF INDIA MINISTRY OF ELECTRONICS AND INFORMATION TECHNOLOGY

## LOK SABHA UNSTARRED QUESTION NO.2325

TO BE ANSWERED ON 26.12.2018

## FRAUD IN DIGITAL TRANSACTIONS

## 2325      ADHIR RANJAN CHOWDHURY:

Will the Minister of Electronics and Information Technology be pleased to state:

- (a)        the  details  of  cases  of  fraud  along  with  amount  of  money  lost  as  a  result  of  fraud  cases  in  digital transactions;
- (b)   whether the Government has put in place a system to monitor risks in digital transactions, if so, the details thereof and if not, the reasons therefor; and
- (c)  whether the Government has proposed a mechanism for customers to file complaints in cases of fraud and guidelines for customers to claim compensation, if so, the details thereof, if not, the reasons therefor?

## ANSWER

## MINISTER OF STATE FOR ELECTRONICS AND INFORMATION  TECHNOLOGY (SHRI S. S. AHLUWALIA)

- (a):   This ministry does not have specific information about the above mentioned question. However, as per the  details  shared  by  Reserve  Bank  of  India  (RBI),  data  on'ATM/Debit  Card',  'Credit  Card'  and  'Internet Banking' frauds reported by scheduled commercial banks and select financial institutions during the last three years and the current year (till September 30, 2018), is given in Annexure.
- (b):   Government has taken a number of steps to monitor and mitigate risks of the cyber security of digital payment systems. Some of the steps taken by Government have been mentioned below.
1. RBI has also set up a Cyber Crisis Management Group to address any major incidents reported including suggesting ways to respond. Based on market intelligence and incidents reported by the banks, advisories are issued to the banks for sensitizing them about various threats and ensure prompt preventive/corrective action. RBI also conducts cyber security preparedness testing among banks on the basis of hypothetical scenarios with the help of CERT-In.
2. RBI carries out IT Examination of banks separately from the regular financial examination of the banks since 2015  to assess their cyber resilience.  The  examination, inter-alia, evaluates the processes implemented by banks for security checks like VA/PT etc. and their follow up action. This report has a special focus on cyber security. The reports have been issued to the banks for remedial action.
3. An  inter-disciplinary Standing Committee  on Cyber Security as indicated in the Statement on Developmental  and  Regulatory  Policies  issued  along  with  the  Sixth  Bi-monthly  Monetary  Policy Statement,  2016-17  announced  on  February  8,  2017  has  been  constituted.  The  Committee,  inter  alia, reviews  the  threats inherent  in  the  existing/emerging  technology  and  suggests  appropriate  policy interventions to strengthen cyber security and resilience.
4. RBI has set up an IT Subsidiary, which would focus, among other things, on cyber security within RBI as well as in regulated entities.
5. Further measures initiated by RBI to control and prevent frauds are given below:
-  Launch of Central Fraud Registry (CFR) in January 2016:

CFR, a web based searchable database of frauds reported by the banks, containing data for the last 13 years has been made operational with effect from January 20, 2016. The Registry is shared with the reporting entities and intended to serve as a tool for timely identification, control and mitigation of fraud risk. The CFR helps in carrying out due diligence during credit sanction process. Apart from CFR, RBI has issued several Caution Advices detailing names of fraudsters and their modus operandi, for instance, by misuse of SWIFT messaging system, ATM malware attack etc. in order to raise awareness among banks and NBFCs about perpetrators and the method they employ to commit frauds.

6.   Government has launched the Cyber Swachhta Kendra (Botnet Cleaning and Malware Analysis Centre). The centre is providing detection of malicious programs and free tools to remove the same.
2. (c):  To provide a mechanism for customers to file complaints in cases of fraud and guidelines for customers to claim compensation, Reserve Bank of India (RBI) has released Banking Ombudsman Scheme and Guidelines on Limited liability of customers in Unauthorized Electronic Banking Transactions.
1. The Banking Ombudsman Scheme, released by RBI is available at the below given RBI website link: https://rbidocs.rbi.org.in/rdocs/Content/PDFs/BOS2006\_2302017.pdf The affected customers could approach the Banking Ombudsman and the complaints would be dealt with as per the provisions of the Banking Ombudsman Scheme 2006. The scheme covers complaints related to digital  payments  including  ATM/Debit  Cards.  With  effect  from  July  01,  2017,  scheme  was  revised  to include complaints related to Mobile and Electronic banking.
2. A circular on Customer Protection - Limiting Liability of Customers in Unauthorized Electronic Banking Transactions was issued on July 06, 2017 for determining the customer liability.

The highlights of the circular are:

- (i) Where customer's own involvement is established, customer will be liable.
- (ii) Customer will not be liable:
-  Where fraud/negligence is on the part of the bank;
-  Third  party  breach  where  the  customer  notifies  the  bank  within  three  working  days  of receiving communication from the bank regarding unauthorized transaction.
- (iii) Where customer's own involvement is not clearly established, customer liability will be limited to a maximum of Rs. 5000/- if he reports within 4 to 7 working days.
- (iv) If customer reports beyond 7 working days, customer liability will be determined based on bank's Board approved policy (copy of circular enclosed).

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## Annexure

| ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   | ATM/Debit Cards, Credit Cards and Internet Banking Frauds reported by Schedule Commercial Banks and Select FIs during the last 3 years and the current year (Amount involved Rs 1 lakh and above)   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Area of Operation                                                                                                                                                                                   | 2015-16                                                                                                                                                                                             | 2015-16                                                                                                                                                                                             | 2015-16                                                                                                                                                                                             | 2016-17                                                                                                                                                                                             | 2016-17                                                                                                                                                                                             | 2016-17                                                                                                                                                                                             | 2017-18                                                                                                                                                                                             | 2017-18                                                                                                                                                                                             | 2017-18                                                                                                                                                                                             | 2018-19 (Upto 30 Sept 2018)                                                                                                                                                                         | 2018-19 (Upto 30 Sept 2018)                                                                                                                                                                         | 2018-19 (Upto 30 Sept 2018)                                                                                                                                                                         |
| Area of Operation                                                                                                                                                                                   | No.of Frauds                                                                                                                                                                                        | Amount Involved (Rs in crore)                                                                                                                                                                       | Extent of Loss to the Bank (Rs. in crore)                                                                                                                                                           | No.of Frauds                                                                                                                                                                                        | Amount Involved (Rs in crore)                                                                                                                                                                       | Extent of Loss to the Bank (Rs. in crore)                                                                                                                                                           | No.of Frauds                                                                                                                                                                                        | Amount Involved (Rs in crore)                                                                                                                                                                       | Extent of Loss to the Bank (Rs. in crore)                                                                                                                                                           | No.of Frauds                                                                                                                                                                                        | Amount Involved (Rs in crore)                                                                                                                                                                       | Extent of Loss to the Bank (Rs. in crore)                                                                                                                                                           |
| ATM/ Debit Cards                                                                                                                                                                                    | 563                                                                                                                                                                                                 | 16.57                                                                                                                                                                                               | 13.01                                                                                                                                                                                               | 724                                                                                                                                                                                                 | 24.47                                                                                                                                                                                               | 20.26                                                                                                                                                                                               | 911                                                                                                                                                                                                 | 65.26                                                                                                                                                                                               | 51.9                                                                                                                                                                                                | 507                                                                                                                                                                                                 | 10.42                                                                                                                                                                                               | 7.06                                                                                                                                                                                                |
| Credit Cards                                                                                                                                                                                        | 616                                                                                                                                                                                                 | 22.33                                                                                                                                                                                               | 13.13                                                                                                                                                                                               | 609                                                                                                                                                                                                 | 16.08                                                                                                                                                                                               | 6.97                                                                                                                                                                                                | 1102                                                                                                                                                                                                | 37.12                                                                                                                                                                                               | 23.11                                                                                                                                                                                               | 357                                                                                                                                                                                                 | 25.61                                                                                                                                                                                               | 20.72                                                                                                                                                                                               |

| Internet Banking   |   12 |   1.3 |   0.77 |   39 |   1.74 |   0.54 |   46 |   7.17 |   4.94 |   57 |   4.31 |   3.42 |
|--------------------|------|-------|--------|------|--------|--------|------|--------|--------|------|--------|--------|
| Grand Total        | 1191 |  40.2 |   26.9 | 1372 |  42.29 |  27.78 | 2059 | 109.56 |  79.95 |  921 |  40.34 |   31.2 |

It may please be noted that as per rectification/updation made subsequent to first reporting by banks, the data may change.

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