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Beware: Cyber Frauds at Banks are On The Rise

By admin | 21st,January 2019

Digital transactions in course of the last few years have no doubt provided unequaled benefits to people transacting business with banks. But alongside the pleasures have come the pains. Nevertheless, the worst among these are cyber frauds at banks, which incidentally have doubled up as of now.

According to reports received from the Reserve Bank of India, the country’s banking sector suffered a whopping loss amounting Rs. 41,167.7 Crores during financial year 2017-18 due to ever increasing banking frauds. This, mind you, is a four-fold increase  in banking fraud as compared to 2013-14, when Rs. 10, 171 Crore worth banking fraud were committed by fraudsters. What is more, around 80% of all recorded banking frauds committed in 2017-18 were high value frauds involving Rs. 50 Crore or above, while 93% of these involving Rs. 1 Lakh or more took place in public sector banks – private sector banks accounting for mere 6% or less.

Worldwide Issue

You may be wrong if you feel you are the only person spending sleepless nights stressing about your bank’s cybersecurity defense, since thousands of people suffer similar fate all over the world. A report by the security giant Kaspersky Lab claims that a multinational gang of cybercriminals pirated up to $ 1 billion over a two year period by infiltrating more than 100 banks across 30 countries.

One of the biggest dangers facing banks all over our lonely planet is the Zero Day Attack, which takes advantage of weaknesses in software before a patch has been developed. “A zero day attack is an attack that’s been developed specifically to bypass traditional security measures,” says Ross Dyer, the UK technical director for Trend Micro, which provides security solutions for banks. “It’s a new piece of malware that no one’s ever seen before, so nobody says: ‘This is malicious, let’s block it.’

Indian Scenario

In order to resolve the blame game –who is at fault: the bank or the consumer, the Reserve Bank of India has set up a guideline based on hundreds of cases and released in 2017-18 Annual Report.

However, it is compartmentalized into three basic categories, depending upon the involvement of the victimized consumer and the true timing of the reporting. If it has been found that the fault does not lie with the consumer, he or she should not bear the loss, provided that the case has been reported within three working days. Nevertheless, the consumer is supposed to bear the full amount of loss if it has been found that it has occurred due to his/her negligence.

If, however, the fault lies neither with the consumer nor with the bank, he/she is supposed to report the incident also within  three working days. Upon more delay, there will be liabilities that may range from Rs.5,000 to Rs. 25,000, depending upon the type of account/ instrument. In case the consumer/customer fails or neglects to report within seven working days, the liability will vary according to policies framed by the concerned bank.

Counter-measures Taken Up By RBI

The Reserve Bank of India doesn’t seem to take this issue of cyber frauds lightly anymore. It plans to act on reducing the cyber fraud occurrences by setting up a tracking and compliance portal system. Moreover, this portal system will be used to address problems from all registered financial institutions, ranging from Banks and NBFC’s to Prepaid Payment Instruments and mobile banking interfaces as directed under the Internal Ombudsman Scheme of 2018. In addition to that, it is going to add a sense of security to the digital transactions, thus promoting it vigorously and substantially all over the country.