Nithin Kamath Highlights Rise in Digital Frauds, Urges SEBI and RBI to Take More Action
Nithin Kamath, the founder and CEO of Zerodha, has voiced concerns regarding the increasing prevalence of fake apps impersonating banks, brokers, and payment platforms. His remarks, shared on social media, follow the Reserve Bank of India's (RBI) recent initiative to introduce an exclusive 'bank.in' domain for Indian banks, aimed at combating phishing and online fraud.
Growing Concerns Over Digital Fraud
Kamath emphasized the escalating variety of digital frauds and cautioned that artificial intelligence (AI) could further exacerbate the issue. While acknowledging the efforts of regulatory bodies like the RBI and the Securities and Exchange Board of India (SEBI), he stressed the need for more decisive action, particularly in addressing fake financial apps that mimic legitimate platforms.
SEBI's Proposed UPI ID System
Kamath referenced SEBI's recently released consultation paper, which proposes a unique UPI ID system for registered brokers. Under this proposal, brokers and mutual funds would be assigned UPI handles with the "@payright" identifier, followed by the bank’s name. For instance, a registered broker’s UPI ID might be formatted as “abc.bkr@payrighthdfc.”
This initiative aims to ensure that investors transfer funds only to SEBI-registered intermediaries and not to fraudulent entities using deceptive UPI IDs. A green triangle with a thumbs-up icon would signify verified transactions, helping users distinguish between legitimate brokers and scammers.
RBI's 'bank.in' Domain Initiative
The RBI’s initiative to implement the 'bank.in' domain represents another significant step toward securing digital financial services. This measure aims to prevent phishing scams, which often involve fraudulent websites mimicking bank portals. The domain will be exclusively available to Indian banks, making it easier for users to verify the authenticity of bank websites.
The registration process, overseen by the Institute for Development and Research in Banking Technology, is scheduled to begin in April 2025. The RBI also plans to introduce a similar "fin.in" domain for non-banking financial entities.
The Urgent Need to Address Fake Financial Apps
Kamath underscored that while these measures address website and payment fraud, regulators must also prioritize the removal of fake financial apps, which pose a growing threat to users. These apps can deceive users into providing sensitive financial information, leading to potential losses.
By taking comprehensive action against both website and app-based fraud, regulators can create a safer digital financial environment for investors and consumers.
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