RBI ban on Bank of Baroda World app: Finance ministry mulls stricter measures to tackle cyber fraud 

In response to a surge in cyber fraud cases, the Union finance ministry is reportedly contemplating implementing stricter measures to safeguard citizens. The Times of India disclosed that sources revealed discussions during a recent inter-ministerial meeting focusing on reinforcing cybersecurity and combating financial fraud.

The move follows the Bank of Baroda World app scam, among other incidents. Notably, in October 2023, the Reserve Bank of India (RBI) prohibited the Bank of Baroda from onboarding new customers on its ‘BoB World’ mobile app due to significant supervisory concerns. While the bank assured corrective actions, the RBI mandated suspension to rectify observed deficiencies under Section 35A of the Banking Regulation Act, 1949.

According to the report, the Finance Ministry may advocate for stricter Know Your Customer (KYC) protocols and enhanced due diligence during customer onboarding, particularly for Business Correspondents (BCs) susceptible to security breaches. Emphasizing improved data security practices, the proposal highlights the necessity for fortified data protection measures at the merchant and Business Correspondents level.

Furthermore, the report suggests that the RBI might prompt banks to reassess the concentration of Business Correspondents in regions with high cyber fraud rates. These measures aim to bolster the resilience of financial institutions against evolving cyber threats and protect consumers from fraudulent activities.

In response to inquiries about potential actions, a spokesperson from the Finance Ministry stated, “We are committed to ensuring the safety and security of financial transactions for all citizens. The proposed measures seek to fortify our defences against cyber fraud and protect the interests of consumers.”

As discussions progress, stakeholders anticipate collaborative efforts between regulatory bodies, financial institutions, and cybersecurity experts to devise comprehensive strategies to mitigate cyber risks and enhance consumer protection in the digital age.