Fintechs have urged the Finance Ministry, Home Ministry and State government authorities to collaboratively develop a digital mechanism that would quickly help in unfreezing of the nodal or pooled accounts frozen by law enforcement agencies (LEAs) on account of any fraud complaints.

The absence of such a mechanism impedes the conduct of business and puts fintechs into severe hardships even if fraud complaints related to small amounts, they said at a recent interactive workshop jointly organised by the Department of Financial Services (DFS) in the Finance Ministry and Indian Cyber Crime Coordination Centre (I4C) in the Home Ministry with LEAs, start-ups and fintech ecosystem partners in the capital.

Some fintechs even suggested that LEAs should not freeze pool/escrow/BC settlement accounts whenever money is available in such accounts. 

A digital format for filling in information that could be of use to LEAs need to be specified and this would to large extent reduce the subjectivity at the hands of officials of these investigating agencies. The immediate reaction for LEAs is to freeze pooled accounts, settlement accounts where monies of several customers are involved, it was pointed out.

High cost of reporting

There is high cost of reporting and regulated entities must be allowed to prefill and report on cybercrime portal since it already has more information than the customer, it was submitted. 

Fintechs are also understood to have underscored the need for automation to bring down costs of supporting LEAs. There should also be a dedicated channel to allow easy reporting of cases from Regulated Entity to file a First Information Report (example Zero FIR).

Meanwhile, Indian Cyber Crime Coordination Centre (I4C) in the Home Ministry are understood to have made certain general submissions including the need to ban the concept of Buy Now Pay Later (BNPL). Also the need for stringent regulation for new fintech companies onboarding merchants and partnering with neo banks was stressed, sources said.

I4C is in favour of need for more regulation for Neo Bank partnerships and also the need for better regulations for credit card partnerships, they added.

It was also submitted that some of the cloud service providers don’t share details easily.  A need of proper IP logs from any fintech company and creation of central pool of such suspected IP for instant blacklisted was submitted, sources said.