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Reserve Bank of India warns banks over rising fraud rate

The Reserve Bank of India (RBI) has issued a warning about the rising rate of fraud in the country, asking banks to tighten their security.

Over the last five years in India fraud rates have increased by 19%, while the value of lost assets rose by 72%. In RBI’s Financial Stability Report for 2017, it outlined that fraud accounted for more than $2.6 billion was lost to fraud in India in the last five years, up from $1.52 billion in the previous five.

RBI is pulling no punches and holds the country’s banks responsible for the rise. The regulator wrote that fraud occurs due to gaps in the credit underwriting standards of financial institutions. On top of that, RBI reckons the new embracing of digital methods has resulted in a rise in fraud as companies fail to spot the potential dangers.

The regulator has issued its fair share of warning to Indian institutions. In February this year it released a statement telling banks to report any form of cyberattack or face charges.

RBI Deputy Governor S S Mundra said that the central bank had received a number of reports about cybercrime – from ransomware to fraud and unauthorised access – but many had come far too late for it to do anything about them.

It created a new committee on cybersecurity that same month, which includes “experts on cybersecurity, government representatives and others.” India doesn’t have strict rules on data breach disclosure, but RBI allows banks to disclose information on an anonymous basis. Awareness and sharing, it says, play an important role in stopping cybercrime.

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