RBI issues master direction to ensure security of digital payments

The Reserve Bank on Thursday came out with a Master Direction for banks and card-issuing entities laying down common minimum standards to ensure security of digital payments.
The Master Direction lays down guidelines for internet banking, mobile payments, card payments, customer protection and grievance redressal mechanism.

“In view of the proliferation of cyber-attacks and their potential consequences, regulated entities should implement, except where explicitly permitted/ relaxed, multi-factor authentication for payments through electronic modes and fund transfers, including cash withdrawals from ATMs/ micro-ATMs/ business correspondents, through digital payment applications,” it said. The provisions of these directions would apply to the Regulated Entities (REs)– Scheduled Commercial Banks, Small Finance Banks, Payments Banks; and Credit card issuing NBFCs.

Such a move is expected to improve the security of digital payment channels and also convenience for users. These directions contain requirements for robust governance, implementation and monitoring of certain minimum standards on common security controls for channels like internet and mobile banking, card payments, etc. The robust protocol will help in checking frequent outages and disruption while providing a secure environment of digital transaction.

The RBI in December temporarily barred largest private sector lender HDFC Bank from selling new credit cards or launching new digital banking initiatives, taking a serious view of service outages at the systemically important bank over the last two years. The digital banking app of the country’s largest lender SBI was also facing service outages.
The Master Direction provides necessary guidelines for the Regulated Entities to set up a robust governance structure and implement common minimum standards of security controls for digital payment products and services and the guidelines are technology and platform agnostic and shall create an enhanced and enabling environment for customers to use digital payment products in a more safe and secure manner, it said.