RBI acknowledges data security fraud

I warned the RBI in February 2004 that Bank's outsourcing of credit card information in India was unsafe and a data security hazard. The corrupt DBOD Department of Banking Operations and Development) department of RBI at Mumbai ignored my complaint. Then we had this Mphasis CitiBank information theft. Somebody should sue CitiBank and RBI in the USA for punitive damages. On my part I have merely sued RBI and Standard Charterd Bank (for a similar offence) and I am asking for all these corrupt officials to be jailed for Information technology frauds and Cyber Crimes especially hacking. This conclusively shows why India has different rules and laws for foreigners and Indians. MNCs OUT !!

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RBI plans norms to curb banks’ outsourcing risks

TIMES NEWS NETWORK[ WEDNESDAY, JUNE 08, 2005 12:04:27 AM]

MUMBAI: The frauds by some call centre ex-employees seems to have drawn RBI’s attention. The Central bank is putting in place rules to minimise risks faced by banks and customers from outsourcing activities.

In April, ex-employees of MphasiS BFL group call centre defrauded four account-holders of Citibank — a subsidiary of Citigroup — of $3,00,000. The accused did so by collecting and misusing account information from customers they had dealt with at the call centre.

The RBI will come out with new guidelines on outsourcing to improve the regulatory supervision and risk management of outsourcing, RBI deputy governor KJ Udeshi said on Tuesday. These will cover aspects related to operational and prudential risks arising out of outsourcing of banking activities by banks.

“RBI has constituted an internal group on outsourcing and based on its recommendations, regulatory guidelines will soon be issued,” Ms Udeshi said at the ‘BFSI Conclave,’ co-sponsored by economictimes.com, along with Indian Banks’ Association and Cisco Systems.

The guidelines apply to banks operating in India. The move is not towards curbing BPO, but to put in place checks and balances to lower incidence of fraud. “A number of IT-related services were outsourced (by banks).

This is posing a challenge to operational risk management and data integrity. Caution needs to be exercised as the new Basel norms require banks to handle voluminous data,” said Ms Udeshi. “Outsourcing has its own challenges, specially in drafting of legal contracts,” she added.

The new guidelines will address regulatory concerns on operational risks and data integrity. RBI is also concerned that outsourcing could lead to transfer of banking risks, management and regulatory compliance to third parties, over whom RBI may not have any regulatory control.

Ms Udeshi spoke about extending the reach of banking to rural areas. She mooted the idea of banks setting up information kiosks in villages. “There are six lakh villages in the country and one bank branch per 18 villages.

Banks can set up an information kiosk for every two or three villages. At the click of the mouse, the farmer will know his account balance and interest due to him and have a host of value-added services at his disposal,” she said.

“The kiosk can double up as a vending machine, but the only constraint will be adequate power supply. Customers can use these kiosks. What better way can there be to free farmers from the shackles of moneylenders and middlemen,” she said.

Emphasising on the potential in rural credit, Ms Udeshi said while industry with a 22% share in the country’s GDP accounted for 45% of gross bank loans, agriculture with 20% of the GDP, received about 11% of advances. She said banks need to deal with data transmission in a safe and secure way on a priority basis.