RBI will Implement AI-Powered Real-Time Technologies to Detect Cybercrime

Nitin Konde, Varun Bhardwaj

Oct 31, 2024 — 3 min read

RBI to Launch AI-Driven Real-Time Cybercrime Detection System

As per the recent media reports, the Reserve Bank of India (RBI) is developing an AI-enabled system that will alert people in real time about financial scams.

An AI-based warning system would identify suspicious transactions as they are going to be made, and individual banks will access a central bank data repository that has information on different kinds of frauds and their offenders. In order to lower the danger of cyber fraud, the system will employ AI to gather and evaluate data on possible frauds, identify high-risk platforms, and alert users during transactions.

Even while cybercrime is still under control, the RBI believes that taking a proactive stance is essential to tackling new issues in the online financial sector. Indeed, MuleHunter AI, an artificial intelligence and machine learning (AI/ML) model, has already been created by the Reserve Bank of India Innovation Hub (RBIH), a division of the RBI, to assist banks and other financial institutions in identifying so-called mule accounts that fraudsters utilise. In contrast, the new system will protect digital transactions and notify users.

RBI Shaping the Cybercrime Fee Banking Services

To identify and stop cyber fraud, the RBI has been developing an AI-enabled fraud information system for some time. Implementing AI that can learn from previous frauds to flag high-risk transactions is one of the proposals made by an expert panel on cyber frauds that the RBI established.

The method seeks to increase banks' and payment gateways' readiness to identify possible fraud while making it more difficult to cash out illicit funds. The frequency and average magnitude of cyber frauds are increasing, despite the fact that current fraud rates are still modest at about one every 114,000 transactions. All of them, then, are a component of the strategies to raise public awareness in order to help stop victimisation.

In 2015, the central bank formed the Cyber Security and IT Examination (CSITE) cell under its Department of Banking Supervision, in addition to establishing several groups to combat cyber fraud. Additionally, it established a Fraud Monitoring Cell that publishes a list of bank and financial institution officials who are in charge of reporting fraud.

Making Guidelines More Stringent

Using information from the Indian Cybercrime Coordination Centre, a government agency tasked with combating cyber fraud, the central bank has also revised instructions for banks. The 2024 Deloitte-NASCIO Cybersecurity Study states that as the digital landscape grows and more personal, health, and financial data is available online, along with critical infrastructure like power, water, and transportation systems integrated with online components, cybersecurity is becoming a top priority for governments, regulators, and corporations. This increases vulnerabilities.

According to the research, which was published on September 30, governments and regulators are realising more and more how important strong information security is to the dependable running of important government services.The area of attack is expanding. Both the Internet of Things and the Internet itself are generating more information. The public's financial, health, and other personal information is stored on more servers in more locations than ever before. According to the report, online operational components are connected with more important infrastructure.

It further stated that state officials are realising that information security is fundamental to the effective operation of vital government services and that all of this leads to an increase in the number of sites of risk.

Online Fraud Cases are Growing

The number of banking frauds rose by almost 300% in FY24 compared to the previous two years, according to the RBI's May annual report. According to the data, public sector banks reported 75% of the total fraud amount in FY24, while private sector banks recorded 67% of the fraud incidents. According to the RBI statistics, the total number of online fraud cases rose by 708% to 29,082 in FY 23 and FY 24.