RBI warns Indian Banks about credit card frauds

Bangalore, May 21: Expressing concern over the rising 'physical loss' of the credit cards, including international credit cards, RBI Deputy Governor V Leeladhar today said that the banks should be extremely careful while keeping the custody of the credit cards.

Speaking at the launch of International credit card by Corporation Bank in association with VISA International here, he said that cyber crime relating to credit card was on the rise and RBI wanted the banks to eliminate such occurrings.

"You have to be extremely careful about the physical loss. Extra care should be taken while dealing with providers of IT services and hire the most reliable people in this front. Security breach can happen at any point -- whether it is in the bank itself or at end points like ATMs," he warned.

He cautioned saying that though internet banking brought a lot of advantages, it also carried risks and banks should be very careful.

Mr Leeladhar said that RBI had drawn a detailed plan to bring all citizens of the country under Financial Inclusion. "We want all, especially those with poor income and the deprived, to get the delivery of banking services at an affordable cost. However, it will be the state government which should take a lead in popularising the concept.

"In countries like the US and France, the government have made it a right of every citizen to get the banking services. However, we have taken a different path making it through a joint effort between the state government and the banking industry," he added.

He called upon the two entities to realise the dangers of financial exclusion of the people which would lead to higher rate of crime, general decline in investment and increased unemployment.

Financial exclusion would lead to social exclusion of the people.

He lauded the efforts of the Himachal Pradesh government which had helped banks achieve 100 per cent financial inclusion. This had happened due to 'enlightened' state government. According to 2001 census, the national average is at a low 59 per cent. While in Kerala it was the highest at 89 per cent in North East it was worse.

In Nagaland people owning bank accounts were just 21 per cent while in Manipur it was 27 per cent.

"This trend should change. The banks will have to note that opening of an account by a poor man is only the first step. The officers should ensure that other benefits like loan facilities be extended to him. Please put an end to our rural population going to the village money lender everytime," he appealed.

Mr Leeladhar objected to the recent trend in Nationalised Banks where customers were not being provided with pass books. "Our people were used to pass books and insistence on accepting banking statements which you now want to offer in its place can prove to be disruptive. Leave the choice to the customer," he advised. The other project RBI had launched was Financial Literacy. When compared to some of the developed countries that had worked towards educating the people about the financial services, 'nothing' seemed to have been achieved by the Indian Banks. The RBI was preparing material that would be translated in different languages to educate people about country's banking services.

"The staff and officers in the banks should also help people understand the banking industry. They should not wait till the Banking Ombudsman to intervene every time. RBI has constituted the Codes and Standards Board of India to draw a standard for banks to perform," he added.

UNI