Finance Ministry Implements Stricter Measures to Combat Financial Fraud
MAS Team | 16 April 2024
In a bid to tackle the rising threat of cybercrime, the Ministry of Finance has issued directives to banks and financial institutions, mandating a rigorous enforcement of the know your customer (KYC) protocol during the onboarding process for new businesses.
Recent actions, including a scam involving Bank of Baroda's World app, prompted the Finance Ministry to take decisive steps in the ongoing battle against financial fraud. This move marks a significant stride in the government's efforts to safeguard the financial sector from cyber threats.
Following the Reserve Bank of India's (RBI) interventions and in light of recent developments, the government has convened a high-level meeting to address these pressing concerns, as reported by The Times of India.
Under the directives from the Ministry of Finance, banks and financial institutions are required to adhere strictly to the KYC process, especially when onboarding new business correspondents, given their susceptibility to security breaches.
Furthermore, the ministry's proposal underscores the importance of enhancing data security and protection measures across businesses and their corresponding entities. The report also hints at potential RBI instructions to banks to conduct thorough reviews of business correspondents operating in sectors prone to cyber fraud incidents.
In October 2023, the RBI, citing significant supervisory concerns, barred Bank of Baroda from enrolling new customers on its BoB World mobile app.
"In exercising its authority under Section 35A of the Banking Regulation Act, 1949, the Reserve Bank of India has directed Bank of Baroda to suspend, effective immediately, any further customer onboarding on the 'BoB World' mobile application," stated the RBI.
Furthermore, the RBI emphasized that any future customer onboarding on the 'BoB World' application would be contingent upon the rectification of observed deficiencies and the reinforcement of associated processes to the satisfaction of the regulatory body.