Several experts the BBC spoke to say that while the RBI’s proactive stance is a welcome step, these proposals – which will be finalised after public comments and feedback – could end up having only a limited impact.
The first proposal, for instance, to have lagged payments could be effectual in preventing OTP fraud of the type that Alok fell for, but in value terms such scams are a “minuscule proportion of the overall fraud landscape”, Rajesh Bansal, former CEO of the RBI’s Innovation Hub, told the BBC.
“These scams were the dominant variety three or four years ago, but frauds have now moved to another level, and are far more sophisticated.”
Implementation of these measures could also be challenging, according to experts.
“It is not going to be easy to implement a lag because there are so many parties involved in the payment network. There is no simple way to do it without changing the current architecture,” says Wriju Ray of IDfy, a leading regulatory technology company.
The RBI acknowledges this in the discussion paper, saying introducing lags would require changes across the system, from transaction queuing to cancellation mechanisms, and would involve “cost and effort for the ecosystem”.
Moreover, the central bank acknowledges, it would “conflict with the core design principle of immediacy of digital payments”.
“It’s like building an expressway and adding speed breakers every few kilometres,” says Bansal.
And this friction is unlikely to help much.
“They [scammers] are just going to figure out a way to overcome the lag. For instance, they might ask for a customer to undertake a payment and wait for an hour for their acknowledgement so an alarm is not raised,” says Ray.
According to him, some of the other measures being considered are fair but raise several questions.
“Additional checks for senior citizens is probably highly recommended but how does one comply? What if your so-called ‘trusted adviser’ is abroad? And what if they ask you to go ahead with a transaction that still ends up being a fraudulent one? Then who does the accountability move to?” asks Ray.
The proposal to further strengthen the detection of mule accounts by limiting credits and enhancing due diligence , could also be effective, but will be resource-intensive and costly. And ultimately, those costs will have to be passed down to consumers, says Ray.
According to Bansal, the RBI already has a ready mule detection platform called Mulehunter.AI which provides information on beneficiary accounts.
“It was conceptualised when I was the CEO. It needs to be implemented in near real-time in the banking system. Unfortunately, that has not happened,” he says, calling for its expeditious execution.
