In News:

The Reserve Bank of India (RBI) is set to develop a Digital Public Infrastructure for Fraud Risk Management (DPIP) under its supervision to curb rising instances of banking frauds in India. This aligns with broader efforts to enhance security and transparency in India’s financial ecosystem.

What is Digital Public Infrastructure (DPI)?

• Definition: DPI refers to foundational digital systems that are accessible, secure, interoperable, and designed to deliver essential public services.
• Examples in India:
  • Aadhaar (Digital ID)
  • Unified Payments Interface (UPI)
  • DigiLocker, CoWIN, etc.

About DPIP

• Objective:To enhance fraud risk management through real-time intelligence sharing, data gathering, and interbank coordination using advanced technologies.

• Key Features:
  • Will strengthen existing fraud detection systems in the banking ecosystem.
  • Enables interoperable intelligence sharing between banks and financial institutions.
  • Leverages AI/ML tools and data analytics for better predictive fraud detection.
• Institutional Mechanism:
  • A committee under Shri A.P. Hota has been constituted to examine various aspects of DPIP’s implementation.
  • RBI Innovation Hub (RBIH) is tasked with developing a prototype, in consultation with 5–10 public and private sector banks.

Need for DPIP

• Rise in Bank Frauds:
  • As per RBI’s Annual Report:
    • FY 2024: ?12,230 crore in frauds
    • FY 2025: ?36,014 crore — almost 3x increase
  • Increasing sophistication of cyber threats and fraud techniques necessitates robust preventive digital infrastructure.

Other RBI Initiatives to Combat Bank Frauds

Initiative                                                                         Description

Multi-Factor Authentication (MFA)           Mandatory for all digital/electronic payments to ensure

                                                                            secure transactions.

Zero Liability Framework                                   Customers are not liable for losses arising from bank’s

                                                                            negligence or third-party breaches.

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