Dr Fauzia Khan is Member of Parliament, Rajya Sabha
Driven by the country’s digital revolution, financial inclusion in India over the past decade has been remarkable, with bank account ownership growing among Indians from 35% in 2011 to 78% in 2021. Picture a small vegetable vendor in rural Maharashtra who spent hours travelling to collect payments or send money home. Today, with just a few taps on her smartphone, she handles daily transactions through UPI, accepts digital payments, and manages to pay her childrens’ college fees online. This revolutionary transition has opened new avenues for financial inclusion, particularly in rural and semi-urban areas, providing access to banking and financial facilities previously inaccessible. However, the same vendor could receive a call from a fraudster claiming to be from her bank, speaking about suspicious transactions. Panicking about her own savings, she might follow the caller’s urgent instructions to “secure” her account, only to lose her monthly income. Thousands of times a day similar scenarios play across India from street vendors to established industrialists. Between January and April 2024, Indians lost about Rs 1,750 crore through over 740,000 cybercrime complaints, with the Indian Cybercrime Coordination Centre recording approximately 7,000 daily complaints by May 2024. While technology has democratised digital payments, turning smartphones into banks and established digital wallets as the norm, it has also unveiled sophisticated financial threats. These range from simple UPI fraud to elaborate “digital arrest” schemes. Cyber safety needs to be integrated into our digital financial ecosystem as a whole, not only as a technical factor, if financial inclusion is to be accomplished. Cyber fraud has evolved with sextortion methods that exploit personal vulnerabilities, especially on WhatsApp and dating apps. Fraudsters use psychological manipulation and pose as law enforcers to extort money. Digital arrest frauds, where criminals posing as police, are taking advantage of more and more people from all walks of life. In these operations, scammers pose as officers from the CBI and RBI to force their victims through “digital arrests”. They use compelling video calls with fake IDs and backgrounds mimicking police stations. The high-profile case of SP Oswal, the Chairman of the Vardhman Group, is an example: they spoofed a virtual courtroom with an impersonator of the Chief Justice, leading to a loss of Rs 7 crore. AI has enabled scammers to use cloned voices and deepfakes to impersonate victims’ relatives—one case involved a fake arrest in Dubai to extort money. The National Informatics Center (NIC) has also flagged “vishing” scams, where fraudsters pose as public officials to extract sensitive information. Dating app scams are also on the rise, with almost three quarters of victims suffering financial losses, where fraudsters build trust before tricking victims into transferring money or revealing personal details that are later used for blackmail. Despite the progress in financial inclusion, many people in India’s rural and semi-urban regions lack awareness about cyber security, leaving them vulnerable to cyber fraud. This compromises financial inclusion as it exposes people to potential losses and exploitation. Incorporating digital literacy into schemes like Jan Dhan Yojana can help the beneficiaries identify phishing scams, safeguard personal data and adopt safe online practices. Co-operation between the financial institutions, telecom service providers, law enforcement and technology agencies is crucial. The 2024 OTP alert system illustrates how collaborative efforts can quickly eliminate vulnerabilities. A common register of fraud and data sharing between industry and law enforcement would enable faster resolution of fraud cases. Public awareness campaigns need to reach local communities and use regional languages and cultural references to simplify cybersecurity concepts. For instance, stories and examples shared in regional dialects can help people understand the consequences of digital scams and how to avoid them. Dedicated rural cybersecurity centers can help provide support, respond to incidents, and notify of crimes. Financial services providers should also incentivise cybersecurity training for banking and fintech employees on the front lines to enhance customer confidence and security. This would improve trust and security within the digital financial ecosystem and, if implemented coherently, these measures can help close the digital literacy gap while ensuring safer financial inclusion.