Financial Fraud Risk Indicator (FRI)

Prelims: Economic and Social Development | Current events of national and international importance.

Why in News?

Recently, the Department of Telecommunications (DoT) has announced sharing of “Financial Fraud Risk Indicator (FRI)” with related stakeholders.

• Financial Fraud Risk Indicator – It is a risk-based metric that classifies a mobile number to have been associated with Medium, High, or Very High risk of financial fraud.
• Development – It is developed as part of the Digital Intelligence Platform (DIP), Ministry of Communications.
• Objectives – To empower financial institutions with advance actionable intelligence for cyber fraud prevention.
• To enhance cyber protection and validation checks in case of mobile numbers flagged with this tool when digital payment is proposed to be made to such numbers.
• Classification of mobile numbers – It is an outcome of inputs obtained from various stakeholders including
  • Reporting on Indian Cybercrime Coordination Centre (I4C’s) National Cybercrime Reporting Portal (NCRP)
  • DoT’s Chakshu platform
  • Intelligence shared by banks and financial institutions
• Working – The Digital Intelligence Unit (DIU) of DoT regularly shares the list of Mobile Numbers that were disconnected (Mobile Number Revocation List - MNRL) with stakeholders along with the reasons for disconnections like cyber or financial frauds.
• As soon as a suspected mobile number is flagged by a stakeholder, it undergoes multi-dimensional analysis, and classifies it into Medium, High, or Very High financial risk associated with it.
• It then shares this assessment about the number immediately with all stakeholders through DIP.
  • For example, PhonePe has adopted FRI to regulate transactions.

• Adoption – Leading UPI platforms like PhonePe, Paytm and Google Pay, who collectively account for over 90% of UPI transactions, have begun integrating DIP alerts into their systems.
• Significance – It empowers banks, NBFCs, and UPI service providers to prioritize enforcement and take additional customer protection measures in case a mobile number has high risk.
• The FRI integration is expected to become an industry standard, bringing systemic resilience to India’s digital financial ecosystem.
• It allows for swift, targeted, and collaborative action against suspected frauds in both telecom and financial domains.

Reference

PIB| Financial Fraud Risk Indicator (FRI)