The National Payments Corporation of India (NPCI) has launched a pilot project to implement a federated AI model in collaboration with four leading banks from both public and private sectors. This initiative aims to enhance fraud detection and risk assessment across the banking ecosystem, according to NPCI chief risk officer Viswanath Krishnamurthy.
Addressing reporters, Krishnamurthy explained that under this model, banks will share key insights from their AI-driven fraud detection systems with NPCI. This will enable a comparative analysis of risk scores, fostering a feedback loop between the banks’ AI models and NPCI. The iterative process will refine predictive analytics, strengthening overall financial security.
“This initiative is designed to be mutually beneficial for both banks and NPCI. By leveraging shared intelligence, we can collectively enhance fraud prevention mechanisms,” he stated.
When asked about the banks involved in the project, Krishnamurthy said that a dedicated analytics team at NPCI is spearheading the pilot but refrained from disclosing further details. Established in 2008 by the Reserve Bank of India and Indian Banks Association, NPCI oversees retail payment systems in the country.
Highlighting the growing threat of fraudulent transactions, he cited official data, revealing that approximately Rs 25 crore worth of fraudulent transactions occur monthly. He noted that nearly 100 percent of these transactions are initiated by customers themselves, often due to greed, fear, or ignorance. He elaborated that 85 percent of victims fall prey to scams due to greed, 10 percent out of fear, and the remaining 5 percent due to ignorance. Notably, no new UPI users have fallen victim to such scams; rather, individuals who have made at least ten UPI transactions are more likely to be deceived when clicking on fraudulent links sent to their mobile devices.
Krishnamurthy also highlighted the rapid growth of UPI adoption, which has witnessed a compound annual growth rate of 74 percent, making it the largest retail payment system. Since its inception, UPI has onboarded over 460 million unique users, facilitating digital transactions across various sectors. Providing recent statistics, he noted that in March alone, Unified Payments Interface (UPI) transactions reached 18.30 billion, reflecting a 36 percent year-on-year growth.