UPI Fraud Incidents Jump 85 Percent in FY24, Govt Stresses Safeguards
By : Madhusudan Sahoo
Update: 2024-11-26 12:15 GMT
New Delhi: The government on Tuesday said that India must strike a fine balance between fostering fintech innovation and ensuring regulatory compliance to combat financial fraud. As India is the burgeoning fintech sector — the largest one globally, the government also aims to continue at its pace in order to revolutionize financial inclusion across diverse sectors. The remark, however, comes at a time when the finance ministry's alarming data on UPI-related fraud incidents surged by 85 per cent in this fiscal.
"India must strike a fine balance between fostering fintech innovation and ensuring regulatory compliance to combat financial fraud. There is a need for regulatory safeguards to address emerging threats like data breaches and financial fraud. We must stay one step ahead of fraudsters and stress the importance of data privacy and cybersecurity to maintain trust in the system," department of financial services (DFS) secretary M Nagaraju said, while addressing the Financial Inclusion and Fintech Summit organised by CII here.
As per the finance ministry's data, the UPI-related fraud cases have surged by 85 per cent in FY24, rising from 7.25 lakh cases worth Rs 573 crore in FY23 to 13.42 lakh cases involving Rs 1,087 crore. In the ongoing FY25, over 6.32 lakh fraud incidents worth Rs 485 crore have already been reported, marking a significant concern for stakeholders in India’s digital payments ecosystem.
Despite the government’s consistent effort to curb the digital frauds, the DFS secretary also emphasised to create an enabling environment for fintech players through initiatives like easing compliance norms, building robust digital infrastructure, and leveraging schemes. "These steps are designed to enhance accessibility and inclusivity in areas that remain underserved. Financial literacy is pivotal — not just for the tech-savvy younger generation but also for older citizens, enabling them to leverage advancements in a democratized financial landscape," he added.
Focusing on the banking sector banks and their credit growth, Mr Nagaraju also announced that public sector banks would unveil new products in the next 3-4 months to improve credit growth for all the sectors, including MSMEs. "We are actually committed to enhancing, and we want to push as much credit as possible because we have a huge number of young people," he said.
Over the last few years, the government has already taken multiple steps to improve credit availability to small borrowers, including announcing a new credit model in the Budget to lend to borrowers with no previous financial records.
Though the banking sector is robust, Nagaraju said that rising digital frauds are posing a risk to financial sector stability, and banks should focus on addressing this challenge.
Mr Nagaraju also said both digital innovations and financial literacy will help mitigate this kind of frauds in the banking system. "For a robust banking system, The Banking Amendment Bill tabled in Parliament during the monsoon session will likely be moved in the ongoing winter session. The amendments are aimed at bringing changes to banking regulations, including redefining substantial interest for directors, increasing the number of nominees for bank deposits and changing compliance reporting dates," he added.