UPI Fraud Up by 85% in FY2023-24: Finance Ministry Data Presented in Lok Sabha
Incidents of fraud in domestic Unified Payment Interface (UPI) transactions rose by 85% in FY2023-24 as compared to FY2022-23, the Finance Ministry disclosed, in response to a question in Lok Sabha’s winter session about the fraud in UPI transactions during the past three fiscal years.
The data revealed a sharp rise in UPI frauds: 7.25 lakh cases amounting to Rs 573 crore were reported in FY 2022-23, increasing to 13.42 lakh cases totaling Rs 1,087 crore in FY 2023-24. By September of FY 2024-25, 6.32 crore fraud cases had already been recorded, amounting to Rs 485 crore.
The query was put forward by Janata Dal (United) MP Alok Kumar Suman. He asked the Ministry to state:
(a)the number of Unified Payment Interface (UPI) transaction conducted in the country including Bihar and Uttar Pradesh during the last two years and the current year, month-wise and state/UT-wise along with the number of incidents of frauds reported in the UPI cash transactions;
(b)the measures taken by the government for safe and secure UPI transaction and prevention of fraud in the transactions; and
(c)whether the Apex Bank proposes to link UPI with fast payment systems of other countries for payments and if so, the steps taken by the Government for financial sector user for ease of payments?
Measures taken to curb fraud
Speaking about the measures taken by the government to curb fraud, the Finance Ministry highlighted the Central Payments Fraud Information Registry (CPFIR), a web-based payment-related fraud tool that has been implemented by the Reserve Bank of India (RBI) since 2020.
Additionally, the ministry said that features like two-factor authentication through PIN, daily transaction limits, and device binding between the customer’s mobile number and the device have been implemented by the Government, RBI, and National Payments Corporation of India (NPCI). The Ministry of Home Affairs also launched the National Cybercrime Reporting Portal, and the helpline number “1930” to report any cyber incidents related to financial fraud.
The ministry also mentioned the introduction of the Digital Intelligence Platform by the Department of Telecommunications to curb cybercrime through features like real-time intelligence sharing, information exchange, and so forth. Moreover, the ministry cited the ‘Chakshu’ facility available on the Sanchar Saathi portal to report suspected fraud communication over call, SMS, or WhatsApp. Besides this, the response also mentioned NPCI’s fraud monitoring solution embedded with Artificial Intelligence/Machine Learning (AI/ML) used by banks to alert and decline fraudulent transactions. The system, which includes the facility to process transactions in real-time, uses the fraud report data submitted by member banks to identify fraud trends and initiate corrective and mitigating action accordingly.
Also Read: RTI: Here’s how much the Indian government spent on UPI between 2021-2024
Rising fraud in UPI
Soon after its introduction in 2016, UPI gained popularity across the country, reporting over 20 times more transactions in July 2018 than in July 2017, according to NPCI data. However, with the growth of UPI, the instances of fraud associated with the interface also increased. For instance, in 2017, two individuals were charged with stealing Rs 45 lakh from nine Axis Bank customers by exploiting the loopholes in the Bharat Interface for Money (BHIM) app and the UPI system. Furthermore, UPI-related fraud complaints contributed to over 35% of the total complaints reported on the National Cybercrime Reporting Portal (NCRP) between April to June 2022.
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