RBI Governor asks banks to have robust systems to curb digital frauds

Reserve Bank of India (RBI) Governor Sanjay Malhotra.
| Photo Credit: Reuters

Flagging the rising digital frauds, RBI Governor Sanjay Malhotra on Monday urged banks to put in place robust and proactive systems to curb such misdoings as well as enhance their oversight of third-party service providers to mitigate the risks.

Mr. Malhotra along with his deputies — M Rajeshwar Rao, T Rabi Sankar and Swaminathan J — met MDs and CEOs of public and private sector banks here on Monday.

The meeting was also attended by Reserve Bank of India’s Executive Directors-in-Charge of Regulation and Supervision.

In his remarks, the RBI chief expressed concern over rise in digital frauds and advised banks to establish robust and proactive systems to thwart such attempts.

While dwelling upon IT risk management and cyber security, the governor urged banks to have enhanced oversight over third-party service providers for mitigation of the risks emanating from them, RBI said in a release.

“The need for RBI and banks to work together closely was emphasised and suggestions were sought from the banks on enhancing the ease of doing business,” it added.

Also, Mr. Malhotra asked the banks to ensure continued financial stability, deepen financial inclusion, improve digital literacy, enhance availability and affordability of credit, strengthen customer service and grievance redress mechanism, and continue to invest in technology.

Further, the RBI chief acknowledged the important role played by the banks in building resilience of the domestic financial system while highlighting some of the main vulnerabilities present globally that can pose downside risks.

The meeting on Monday was part of the central bank’s continuous engagement with the senior management of its supervised entities. The previous such meeting was held on July 3, 2024.