The parliamentary committee on finance in India recently discussed the increasing cases of cyber fraud in the country. Representatives from the National Payments Corporation of India (NPCI) and the home ministry appeared before the committee to provide their insights. The NPCI proposed implementing stricter controls on search engines to filter out fake customer care numbers. They also recommended issuing advisories to social media platforms, cautioning users against sharing sensitive financial information.

Jayant Sinha, Chairman of the Parliamentary Panel on Finance, in an interview to CNBC-TV18, expressed his concerns about the potential rapid growth of cybercrimes in India if immediate action is not taken. He acknowledged that India's digital economy is highly regarded worldwide, with a significant rise in transactions through digital platforms like UPI and ONDC. However, this growth has also led to vulnerabilities and emerging threats related to cybercrimes.

Sinha highlighted regulatory, capability, and legal gaps in the ecosystem as contributing factors to the rise in cybercrimes.

"India's digital economy is envy of the world. The number of transactions that we are doing now using our digital public infrastructure through UPI, ONDC and so on is exploding. As a result of that certain vulnerabilities and threats have also emerged in terms of cybercrimes. We believe these threats will get further aggravated and perhaps grow rapidly because of the three major threats that we see emerging on the horizon. One is, artificial intelligence and generative AI, the second is various actors - state and non-state actors which are trying to get engaged in this kind of financial crime. Then there are various organised crimes in India that are trying to take advantage of various vulnerabilities," Sinha said.

"As we have gone through our hearings, and we've had hearings, including not just government and government agencies, but also a number of players in the financial ecosystem, and we will continue these, for some time, we are finding that there are three types of gaps that have emerged. And these are gaps that are regulatory gaps, capability gaps, and then there are certain legal and institutional gaps as well," Sinha added.

Sinha emphasised the need to educate consumers about their rights and ways to protect themselves. Sinha noted that many financial institutions are not adequately prepared to deal with malware and various types of attacks. He also mentioned the existence of strong protections in India, such as two-factor authentication, but consumers are often unaware of their rights and the available helpline for reporting financial crimes.

Sinha said, "Many financial institutions also we found, are not sufficiently hardened to deal with malware, and various kinds of attacks that happen. And of course, we need to make sure that consumers are really aware of their rights and understand and know that there is in fact, 1930 as a helpline that they can use within three days to report a financial crime. So there are various protections that already exists, India in fact, has very strong protections, particularly because of two factor authentication and so on. But consumers are not fully aware of all of their rights, and how best to protect themselves."

Manish Tewari, a member of the Parliamentary Panel on Finance, emphasised the need for a comprehensive security audit of India's critical infrastructure. This includes payment gateways, banks, financial institutions, as well as essential systems like power grids, railways, air traffic control, and hydroelectric power stations.

"Today you have 4.9 billion people around the world who are connected to the internet. That is about 63 percent of the population of the world. So, therefore, under those circumstances, you face twin challenges. One is the challenge of cybercrime and the other is the challenge of cyber warfare. So, under those circumstances, India needs to carry out a very comprehensive audit as to how secure our critical infrastructure is and that includes payment gateways, banks, other financial institutions and organisations like Paytm etc, but more importantly, power grids, railways, air traffic control systems, hydroelectric power stations etc," Tewari said.

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Tewari stressed that as India continues its digital transition, it becomes essential to strengthen resources and human capital to protect critical infrastructure from potential attacks. He emphasised the importance of a comprehensive government approach to enhance the overall security paradigm.

Watch video for entire discussion.

(Edited by : Pradeep John)