Friday, June 3, 2011

RBI Recommended Constitution Of Secure Systems To Check Credit Card Frauds

Reserve Bank of India (RBI) has recently released the report of its working group on securing card present transaction. RBI has also prescribed cyber security due diligence standards for banks of India that must be implemented in a phased manner.

Despites these pro active steps, cyber security of banking sector of India is not upto the mark and ATM frauds, credit card frauds, internet banking frauds, etc are increasing in India. This is primarily due to the fact that banks in India are not following the recommendations of RBI.

ATM frauds and credit cards frauds cannot be tackled effectively till we use techno legal measures. Amid rising instances of debit and credit card frauds, an RBI panel has recommended that banks should put in place secure systems to check such cases within a year's time. All acquirers and issuers may put in place adequate fraud risk management systems and processes within 12 months, said the panel in its recommendations for an action plan to implement additional authentication for all card transactions.

For the benefit of debit card holders, it suggested that all transactions through such cards should have a PIN (Personal Identification Number) as an additional factor of authentication at point of sale (POS).

Further, mechanisms like designated time, microchip technology, biometric tokens, enhanced security, ATM monitoring, customised softwares, customer motivation, alerts, etc can be used to minimise and prevent ATM frauds in India. The banks must spread public awareness in this regard among the public so that these frauds can be prevented.

However, preventing ATM frauds is not the sole problem of banks alone. It is a big threat and it requires a coordinated and cooperative action on the part of the bank, customers and the law enforcement machinery. The ATM frauds not only cause financial loss to banks but they also undermine customers’ confidence in the use of ATMs. This would deter a greater use of ATM for monetary transactions. It is, therefore, in the interest of banks to prevent ATM frauds.

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