Following a surge in fraudulent activities, including the infamous Bank of Baroda World app scam, the Union finance ministry is reportedly gearing up to propose stringent measures aimed at safeguarding citizens from cyber fraud. The Times of India reported that sources familiar with the matter mentioned a recent inter-ministerial meeting dedicated to enhancing cybersecurity and combating financial fraud.
RBI’s Intervention on Bank of Baroda World App
In October 2023, the Reserve Bank of India (RBI) took decisive action against the Bank of Baroda’s mobile app ‘BoB World’, citing significant supervisory concerns. In response, the RBI directed Bank of Baroda to halt the onboarding of new customers onto the ‘BoB World’ application, invoking its authority under Section 35A of the Banking Regulation Act, 1949. While the bank assured that corrective measures had been implemented, the RBI’s directive remained firm, stipulating that further customer onboarding would be contingent upon the rectification of observed deficiencies and the strengthening of related processes to the satisfaction of the RBI.
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Proposed Measures by Finance Ministry
According to reports, the finance ministry is inclined towards advocating more stringent Know Your Customer (KYC) procedures and heightened due diligence by banks and financial institutions during the onboarding of new merchants. The focus extends particularly to Business Correspondents (BCs), who are deemed to be potentially more susceptible to security breaches. Additionally, the ministry’s proposal emphasizes the imperative of enhancing data security and data protection practices at both the merchant and Business Correspondents levels. The report further suggests that the RBI may prompt banks to reassess the concentration of Business Correspondents in regions with elevated instances of cyber fraud.
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