Page 10 - Banking Finance June 2024

RBI CORNER

laxed for the space and satellite sec- onboarding new customers through money that then accumulates in the
tors recently. online and mobile banking channels, scammers' accounts.
citing "serious deficiencies" in the pri-
Officials said that although the bulk of To fight back, the regulator is likely to
the heavy lifting in terms of FDI re- vate lender's IT system and repeated let banks suspend such accounts, free-
failures to fix them. In 2022 and 2023,
forms has been completed, talks are ing victims from first having to file po-
ongoing to see if conditions for these the central bank's IT examination of lice complaints, said two government
key sectors can be further eased. Any Kotak had thrown up these "significant sources and a third aware of the cen-
concerns".
changes will be made after the elec- tral bank's thinking.
tions that end on June 1. However, services to existing custom- The Finance Ministry, Home Ministry
ers will not be impacted, RBI said.
"Some areas in finance and insurance, and central bank did not immediately
(and) even in defence, could still be The action is significant because digi- respond to Reuters' emails seeking
looked at in terms of further reduc- tal channels have become the primary comment.
tion. Brainstorming is going on, but it means for private lenders, particularly
While perpetrators can empty ac-
has not reached anywhere," said an Kotak Mahindra Bank, to conduct busi-
official aware of deliberations. A final ness. counts within minutes, banks now
call will be taken after consultations freeze accounts only after police reg-
According to the bank's investor pre-
among officials and with stakeholders. ister a crime report, a procedure that
sentation in third quarter of 2023-24,
FDI equity inflows fell 13% year-on- 95% of its new personal loans, 99% of sometimes takes days, given the num-
year to $32.03 billion during April-De- new credit cards, and 79% of its new ber of crimes law enforcers must
cember 2023. business loans are done digitally. The tackle, the sources said.
The United Nations Conference on bank has also booked 90% of its new The suspensions would target accounts
Trade and Development (Unctad) has investment accounts through digital or frequently misused to transfer funds
attributed the FDI slump in developing do-it-yourself channels. gained from cybercrime, both govern-
nations to weak investment and eco- ment sources said.
nomic uncertainty. RBI plans curbs on suspect The banking regulator will amend its
FDI in banking, financial services and bank accounts to fight guidelines for banks based on informa-
insurance (BFSI), outsourcing as well as cyber fraud tion from the Home Ministry's cyber
R&D - the group that attracted the fraud fighting agency, the Indian
highest inflows - was at $5.18 billion in The Reserve Bank of India plans to Cybercrime Coordination Centre, one
April-December 2023. soon change guidelines to permit banks of the government sources said.
to temporarily freeze accounts sus-
The Centre's view is that India should
pected of being used to commit cyber
relax FDI rules further, though its cur- Illegal forex trading: RBI
crimes, as it battles a rising wave of
rent policy is more liberal than that of online crime, three sources told cautions banks, customers
some other nations, officials said. "We Reuters.
are more liberal than most of the The Reserve Bank of India (RBI) has
Asean countries, which are generally The plans come as internal govern- cautioned banks and customers again
considered very open," said the official. ment data show individuals have lost about unauthorised entities offering
funds of nearly $1.26 billion in financial foreign exchange trading using the
Kotak can't issue fresh institutions to cyber fraud since 2021, banking channels. In a circular issued,
with one of the sources saying about the RBI said it has come across in-
credit cards, onboard new 4,000 fraudulent accounts are opened stances of unauthorised entities offer-

clients online: RBI every day. ing foreign exchange (forex) trading
facilities to Indian residents with prom-
In one of its toughest disciplinary ac- Tens of thousands of Indians receive
tions on a large entity, Reserve Bank daily telephone calls seeking to de- ises of disproportionate and exorbitant
of India barred Kotak Mahindra Bank fraud them by accessing their bank returns.
from issuing fresh credit cards and accounts and wallets to siphon of "On investigation, it has been observed

BANKING FINANCE | JUNE | 2024 | 9