RBI Forms Committee under A. P. Hota to Establish Digital Payments Intelligence Platform

The Reserve Bank of India (RBI) has constituted a committee under the chairmanship of Abhaya Prasad Hota, former Managing Director (MD) and Chief Executive Officer (CEO) of the National Payments Corporation of India (NPCI). This committee is tasked with exploring various aspects of setting up a digital public infrastructure for a Digital Payments Intelligence Platform, an initiative proposed by the RBI.

Purpose and Objectives:

• Digital Public Infrastructure: The primary objective of the committee is to examine and provide recommendations for establishing a robust digital public infrastructure for the Digital Payments Intelligence Platform.
• Fraud Reduction: The platform will leverage advanced technologies to mitigate payment fraud risks, enhancing the security and integrity of digital transactions.

Timeline:

• Submission Deadline: The committee is expected to submit its recommendations within two months.

Composition of the Committee:

• Financial Institutions: The committee includes representatives from major financial institutions such as State Bank of India (SBI), HDFC Bank, and ICICI Bank.
• Industry Experts: Notable members from the payments industry include:
  • Vipin Surelia, Head of Risk at Visa
  • Arif Khan, Chief Innovation Officer at Razorpay
  • Jitendra Gupta, Founder of Jupiter
  • Pranay Jhaveri, Managing Director of Euronet

Key Functions of the Committee:

1. Fraudulent Transaction Identification: Define modalities for identifying fraudulent transactions, which will then be reported to the Central Payments Fraud Information Repository (CPFIR).
2. Customer Data Privacy: Recommend guidelines to ensure the privacy and protection of customer data.
3. Financial Sustainability: Suggest ways to ensure the financial sustainability of the platform.

Context: Digital Payments Frauds in India

• Rising Fraud Incidents: According to RBI data, domestic payment frauds surged by 70.64%, from Rs 1,526 crore (October 2022 to March 2023) to Rs 2,604 crore (October 2023 to March 2024).
• Increase in Fraud Volume: The volume of frauds increased from 11.5 lakh (October 2022 to March 2023) to 15.51 lakh (October 2023 to March 2024).
• Exponential Growth in Fraud Cases: The RBI’s FY24 annual report highlighted a 300% increase in registered fraud cases, rising from approximately 9,000 cases in 2022 to around 36,000 cases in 2023-24.
• Sector-specific Trends: Private sector banks reported the highest number of fraud cases, while public sector banks accounted for the highest value of frauds.

Conclusion

The establishment of the Digital Payments Intelligence Platform is a strategic move by the RBI to bolster the security and resilience of India’s digital payment ecosystem. By leveraging advanced technologies and fostering collaboration among key stakeholders, the initiative aims to significantly reduce payment fraud risks and enhance trust in digital transactions. The committee’s recommendations will play a crucial role in shaping the future of secure digital payments in India.