RBI’s deputy guv pitches for zero-fraud banking environment transparency

Mumbai, Jan 9 (PTI) RBI Deputy Governor T Rabi Sankar on Friday called for transparency in the banking services and products, saying the industry should strive for a "zero fraud" environment.
    Speaking at the concluding session of the 21st edition of the Indian Banking Technology Conference here, Sankar also emphasised that getting the trust of people is key to keeping a bank's customers and the users of its products and services loyal to the system.
    "It is important to understand that if we do not price things (products and services) in a manner that is transparently shown to the customer, to be fair, it is possible that customers will move to other alternatives," the deputy governor said.
    The banking system in the country certainly stands out for effective pricing, but there are still some basic principles that are required for giving the confidence and the trust to the user that the prices that he or she pays are sufficient (and) not exploitative, he added.
    Cautioning the industry that there is no certainty that the function in place with the bank today will remain with it or not in the future in the face of rapidly changing technology, as has been seen in the payment domain, he said, "So, my suggestion is that let's make an effort".
    "It may not be retail direct itself, but the whole idea is that you can use technology to achieve aggregation, which will obtain the pricing efficiency...necessary in this particular situation," he added.
    Sankar said that if there is a system where the price is worked out transparently, the question of varying pricing may not arise.
    "So, that is another area, I think, where banks would need to collaborate," he said and urged the industry to come up with its suggestions on the issue.
    But, innovation will work best when there is collaboration, and a lot of minds are working on it, he added.
    Stating that the number of frauds in the payment systems has been going down, he said, "It used to be quite high for cards, but I have seen that trend also going in a positive direction".
    The incidence of fraud in UPI stood at 0.68 per lakh transactions, he pointed out.
    "Now, that works out to roughly about 4,800 transactions per day, which are subject to fraud. The total number of transactions in a day is about 70 crore...
    "Not very high if you look at the transaction volumes that we have, but the numbers on a very large base of users could still be sufficiently large to pose a concern for everyone, every bank, every system provider that the incidence in terms of absolute numbers is still large enough and it's important that we have to address them so that trust in the system is maintained," he said.
    "Therefore, as low as these rates of fraud may be, even they are not acceptable to us. What we have to aim for is a zero-fraud environment. By zero fraud, I do not mean that fraud will be completely eradicated someday. That seems very unlikely.
    "But, trying to reach an objective of zero fraud is important for us to be constantly on our guard. And we should try and build systems that minimise such events and maintain the trust of the people so that the development and the inclusion in payment systems happen," Sankar said.

(This story has not been edited by THE WEEK and is auto-generated from PTI)