Cyber frauds of ₹5,574 crore has been reported in the current financial year till September, 2023 on ‘National Cybercrime Reporting Portal’, much higher than ₹2,296 crore of the same type of frauds reported in the year 2022, said a Parliamentary panel report, on Thursday.  

In its report submitted to Parliament on Thursday, the Standing Committee on Communications and Information Technology (2023-24), said it was concerned to note that the volume and value of money lost in cyber frauds are very high in comparison to the recovery rate which has been abysmally low.

“According to the submissions made to the Committee, the recovery rate has been about 10.4 per cent of the transactions reported over the last three years -- 2020, 2021 and 2022. This scenario brings about a trust deficit in the digital payment system which needs to be attended to at the earliest,” it said.

The 54th Report of the Committee on “Digital Payments and Online Security Measures for Data Protection” relating to Ministry of Electronics and Information Technology (MeitY), also recommended that there is a need for a multi-pronged approach to deal with cyber crime. As per Indian Cyber Crime Coordination Centre, cyber frauds that were reported, increased by 128 per cent in 2022 in comparison to 2021. This exponential increase of cyber frauds is alarming and the Committee sees a necessity to have a multi-pronged approach to deal with the issues of cyber frauds, it said.

“With a view to tackle this, opining that punitive measures are long drawn, time consuming and less effective, the Committee emphasises on having a multi-pronged approach with effective coordination of all stakeholders to deal with cyber frauds. The Committee called upon the various ministries involved to focus on preventive measures to ensure that cyber frauds are held under check,” it said in the submission.

The Committee also said, that it was informed that measures have been taken to strengthen cyber security of Android Play Store and the Indian Cyber Crime Coordination Centre periodically sends hash values of these apps to Google for appropriate action.

“More than 200 Android and banking malwares have been identified and shared with Google and Law Enforcement Agencies (LEAs). Illegal and fraudulent lending apps are found on both Google Playstore and Apple App Store and these are being regularly sent to these entities for urgent action against such apps,” it said.

Ministry of Home Affairs (MHA) has also started maintaining a repository of Android and banking malwares which are causing a threat to digital payment security.

“The Committee would like to know how effective has this measure been in containing/checking such frauds. The Committee would also like to know the action taken by Google and LEAs with regard to the information that has been sent to them for taking urgent action,” it mentioned.

On promotion of local players, it recommend that there should be focus on promotion of local Indian players in the fintech universe, as the use of fintech apps is slated to increase for digital financial transactions.

“Indigenously developed BHIM UPI is a good example of it, however it’s share in the UPI market is very low. The Committee opined, that the regulation of Indian fintech apps would be more feasible for the regulatory bodies such as RBI and NPCI in comparison to foreign entities which have multiple jurisdictions. As India is focusing on ‘Make in India’ in other sectors, the Committee are of the opinion that local entities are to be promoted in fintech sector,” it suggested.

It noted that fintech companies, apps and platforms such as PhonePe and Google Pay which are owned by foreign entities dominate the Indian fintech sector. The market share in terms of volume of key players of UPI, Google Pay and PhonePe was 36.39 per cent and 46.91 per cent, respectively, in October-November 2023. However, market share by volume of indigenous BHIM UPI was only 0.22 per cent in the same period.