RBI MPC News: In a bid to ensure the security of the Aadhaar Enabled Payment System (AePS), the Reserve Bank of India (RBI) Governor Shaktikanta Das today announced measures to streamline the process for on-boarding of AePS service providers and introduce some additional fraud risk management measures. Following the three-day meeting of the Reserve Bank of India's Monetary Policy Committee (MPC), RBI Governor Shaktikanta Das announced several measures aimed at bolstering the security and efficiency of digital payment systems.
"Aadhaar Enabled Payment System (AePS) has played an important role in financial inclusion by enabling customers to make digital payment transactions through service providers such as business correspondents. Given their significance, it is proposed to streamline the process for onboarding AePS service providers and introduce some additional fraud risk management measures. These measures will further strengthen the security of the AePS system and enhance its robustness," RBI said.
Aadhaar Enabled Payment System (AePS), operated by NPCI, enables customers to perform digital payment transactions in assisted mode. AePS helps bank customers use their Aadhaar as his/her identity to access his/ her respective Aadhaar-enabled bank accounts and perform basic banking transactions like balance enquiry, cash deposit, cash withdrawal, and remittances through a Business Correspondent. It catered to the banking needs of 37 crore users in 2023.
However, recent instances of fraudulent activities, including stealing Aadhaar data and siphoning funds, have raised concerns regarding the security of AePS. In response, proposed to streamline the onboarding process, including mandatory due diligence, for AePS touchpoint operators, to be followed by banks. "Additional fraud risk management requirements will also be considered. Instructions in this regard shall be issued shortly," RBI release said.
More instances of culprits siphoning off money from people using AePS after stealing their Aadhaar data from several websites, like the revenue department website or by using silicone thumbs to operate biometric POS devices and biometric ATMs are coming to light. Bengaluru Police Police had advised people on January 20, 2024, to disable their Aadhaar-enabled Payment System (AePS) while not using it to avoid being cheated by cybercrooks. In December 2023 NPCI said to only allow those transactions after Aadhaar-based biometric authentication of business correspondents (BCs) and agents.
Further, the RBI Governor highlighted the need for a principle-based framework for authentication of digital payment transactions. RBI maintained a status quo on the repo rate at 6.50 per cent, making it the sixth consecutive policy review of no rate action. Last hike in the repo rate by 25 basis points (bps) was on February 8, 2023, to 6.50 per cent. "Amid lingering uncertainties, monetary policy has to remain vigilant and the last mile of disinflation navigated, the RBI Governor said explaining why it was unchanged," RBI said.