MUMBAI: To strengthen the security of the rapidly growing digital payments ecosystem, the Reserve Bank is implementing a new ‘digital payments intelligence platform’ that will leverage artificial intelligence to identify potentially risky transactions before they are completed.
Speaking to the press after the monetary policy committee (MPC) meeting, RBI governor Sanjay Malhotra said Wednesday the platform is currently under development at the RBI Innovation Hub which is building prototype.
An entity is also being set up to operate the system once it is launched, he said without disclosing a timeline for the rollout of the proposed platform, which once operational will collect and analyse data from various sources to identify potential threats and prevent fraudulent activities.
“The idea is to gather information from all available sources and train an AI system on this data,” he said, adding, “this system will flag potentially risky transactions in real-time. Based on these alerts, either the customer or the bank can decide whether to proceed with the transaction or not. We expect this to have a meaningful impact in reducing fraudulent activity in the system," said deputy governor T Rabi Shankar, who is in-charge of payments and settlement departments along with information technology department at the central bank,
While stressing that fraud levels in digital payments space remain low, he underscored the need for continued vigilance.
“If you look at the number of fraud cases relative to total transactions in UPI and similar platforms, they remain well under control. But with the exponential growth of digital payments, ensuring security is a priority,” Shankar said.
The domestic digital payments market has seen meteoric growth in recent years, driven by the popularity of the UPI, mobile wallets, and QR-based payments. According to the National Payments Corporation (NPCI), UPI transactions crossed Rs 14 trillion in September alone.
The statements in response to a media query comes days after the finance ministry reportedly raised concerns with the Reserve Bank over delays in rolling out the digital payments intelligence platform (DPIP). This is the flagship project designed to curb fraudulent digital transactions and enhance payment security.
In June last year, the RBI had set up a committee under the chairmanship of AP Hota, the first chief executive of NPCI to head the panel.
In its annual report in May, the RBI had shared the incidents of financial frauds which indicated a fall in such incidents in FY25 but the money rose threefold to Rs 36,014 crore. Most cases in digital payments involved Rs 520 crore, says regulator in annual report, adding private sector banks reported the highest number of fraud cases.
As many as 23,953 incidences of fraud involving banks took place in FY25, down 34% from FY24, said the annual report for FY25 but the amount involved in frauds in FY25 was Rs 36,014 crore, up almost three times.
“The increase in the amount involved in the total frauds reported during 2024-25 over 2023-24 was mainly due to removal of fraud classification in 122 cases amounting to Rs 18,674 crore reported during previous financial years and reporting afresh during the current financial year after re-examination and ensuring compliance with the judgement of the Supreme Court dated March 27, 2023,” said the report.
Private-sector lenders reported the highest number of fraud cases (14,233) in FY25, accounting for 59.4% of all cases in the banking sector. State-owned banks reported 6,935 cases (29%) but the amount involved was higher at Rs 25,667 crore (71.3% of the total), compared to Rs 10,088 crore reported by private sector lenders.