RBI pushes banks to adopt DoT’s financial fraud risk indicator to tackle cyber threats

In a significant step toward bolstering India’s defence against cyber-enabled financial frauds, the Reserve Bank of India (RBI) has issued an advisory directing all Scheduled Commercial Banks, Small Finance Banks, Payments Banks, and Co-operative Banks to integrate the Department of Telecommunications’ (DoT) Financial Fraud Risk Indicator (FRI) into their systems. Issued on June 30, 2025, the directive is set to reshape how financial institutions approach fraud prevention in India’s fast-expanding digital economy.

“This is a watershed moment in the fight against cyber-enabled financial frauds and a testament to inter-agency collaboration,” the official release stated. “It underscores the strategic importance of real-time, automated data exchange between banks and DoT’s Digital Intelligence Platform through API-based integration.”

The Telecom Department introduced the Financial Fraud Risk Indicator (FRI) in May 2025, aiming to enable enhanced intelligence sharing between telecom authorities, banks, UPI service providers, and financial institutions. It marks a major stride toward combating cyber fraud and financial crime by fostering a unified, technology-led approach.

“FRI allows for swift, targeted, and collaborative action against suspected frauds in both telecom and financial domains,” the release stated. “It bridges crucial gaps between telecom data and financial sector vigilance.”

Explaining the mechanics of the FRI, the DoT clarified that it is a risk-based metric designed to classify a mobile number into one of three risk categories: Medium, High, or Very High, depending on its association with financial fraud activities.

It includes reports from the Indian Cyber Crime Coordination Centre’s National Cybercrime Reporting Portal (NCRP), intelligence from DoT’s own Chakshu platform, and data shared by banks and financial institutions.

The FRI empowers banks, non-banking financial companies (NBFCs), and UPI service providers to take proactive measures when a mobile number is flagged as high risk. Financial institutions can utilize FRI insights in real time to block suspicious transactions, issue alerts to customers, or delay certain financial operations until further verification is completed.

Already, prominent institutions such as PhonePe, Punjab National Bank, HDFC Bank, ICICI Bank, Paytm, and India Post Payments Bank have started integrating the FRI into their operational workflows.

“With UPI now the preferred mode of digital payments in India, the stakes are incredibly high,” the release noted. “The FRI brings precision and speed to fraud detection, helping prevent losses before they occur.”

In addition to the FRI, DoT routinely updates stakeholders through its Mobile Number Revocation List (MNRL), which lists numbers disconnected due to links with cybercrime, failed re-verification processes, or misuse. Many of these numbers are closely tied to financial fraud activities.

“The Financial Fraud Risk Indicator is more than just a technological innovation—it’s poised to become a new standard for digital trust and security in India,” the release added. “It aligns seamlessly with the Government’s broader Digital India vision.”

As more financial institutions integrate FRI into their systems, experts anticipate it evolving into a sector-wide benchmark, enabling faster decision-making, reducing risks, and strengthening the resilience of India’s digital financial architecture.