India File: Digital cash is everywhere, and so are scammers
March 18 - By YP Rajesh, South Asia Breaking News Editor & Lead Writer, with global Reuters staff.
India's consumers and businesses engage in more digital transactions - to pay for parking or cigarettes or even peanuts in pushcarts - than those of any other country, giving a boost to its fast-growing economy. But scams and fraud schemes are also on the rise as security infrastructure and regulations lag, potentially tripping up India's digital economy. That's our focus this week.
And, India's stock market slump has persisted for five months and now threatens to weigh on consumer spending, just as the economy tries to regain its footing on growth. Scroll down for more.
THIS WEEK IN ASIA
** China retail sales pick up as Beijing turns to consumers to ease US trade pressure
** Major Japan firms agree to big wage hikes, impact on BOJ policy in focus
** Amid tariff risks, Vietnam signs energy deals with US, reviews duties to boost US imports
** As Tesla tanks, Musk's hand-picked board chair is doing just fine
STREET VENDORS GO DIGITAL
Indian street vendors, parking lot attendants and - according to media reports - even beggars with QR codes are taking digital payments, sometimes for as little as 10 or 20 rupees, making India number one globally in the sheer number of digital transactions.
The finance ministry has praised the rise of digital payments for enhancing economic opportunities and financial inclusion, while the central bank has labelled it the "growth engine of tomorrow".
But headlines last week cast the spotlight on an uglier side of this transformation: runaway digital financial crime.
Digital scams are on the rise, including the case of an Indian textile baron who lost $830,000 last year after fraudsters summoned him to an online hearing at a fake Supreme Court that threatened him with jail.
The finance ministry told parliament last week that the number of high-value cyber fraud cases in the latest full fiscal year was more than four times the number the year before, while a central bank report said total digital payment fraud amounted to $175 million in the same period.
Also among the news headlines last week: India brought home nearly 550 people who had been lured with fake job offers to "scam centres" in Myanmar and other Southeast Asian countries, where they were made to engage in financial cybercrime. Hundreds more are still waiting to return.
This, ironically, coincided with the central bank's fifth annual "Digital Payment Awareness" week, held to promote safer online payments in the world's fastest-growing major economy.
FAKE CODES, FAKE COURTS
It is a rare day in India these days when there is no media report or social media post about people duped by a digital scam.
In the early days of scamming, smartphone users were deceived by fraudulent payment codes that they were told would pay into their bank accounts, but that took money out instead.
Now, with the use of AI and spoofing software, scammers have been creating fake police stations and even the fake court hearing that defrauded the textile tycoon, or using the voice of relatives to dupe victims.
Financial and tech analysts blame poor cyber literacy, digital security loopholes, sophisticated AI-driven phishing attacks and deepfake scams for the rise in digital financial fraud.
"The golden age of cybercrime is here — where AI, the dark web, and rampant data exposure fuel financial fraud at an unprecedented scale," cyberlaw expert Pavan Duggal was quoted as saying in a November 2024 report by the Indian Cyber Crime Coordination Center.
Regulators have taken notice.
The telecoms regulator has ordered the blacklisting of spam callers, while the central bank has proposed allowing banks to freeze accounts suspected of use for fraud.
Public and private agencies have launched awareness campaigns where Bollywood stars urge consumers to remain alert.
But financial and tech analysts say more needs to be done, including awareness campaigns, cybersecurity investments by banks and fintech firms, tech training for law enforcement officers, and strong data privacy and protection rules.
"Enhancing the safety and security of the payments ecosystem is a work in progress," central bank Governor Sanjay Malhotra said last week.
What should India be doing to fight digital financial crime? Write to me with your views at yp.rajesh@thomsonreuters.com, opens new tab.
QUOTE OF THE WEEK
"Our aim is to free up two to three hours of time daily for doctors and nurses with AI interventions."
Sangita Reddy, joint managing director of India's Apollo Hospitals, spoke with Reuters in an interview published on Thursday.
Apollo has more than 10,000 beds across its hospital network, making it one of the largest in the country. Reddy said the company would increase its digital spending on AI this year.
Apollo's AI tools, some of which are experimental or still in the initial stages, would be able to analyse patients' electronic medical records to suggest diagnoses, tests and treatment. They would also help to transcribe doctors' observations, generate faster discharge summaries and create daily schedules from nurses' notes.
MARKET MATTERS
India's five-month-long equity slump, the worst in nearly three decades, has wiped out about $1 trillion in market capitalisation and delivered a major blow to retail investors.
This has dented consumer spending and threatens to further slow growth in the world's fifth-largest economy, write Reuters reporters Bharath Rajeswaran, Siddhi Nayak and Vivek Kumar M.
Investors trying to catch their breath may have to wait a bit longer for the selloff to run its course, analysts say, as uncertainty about the impact on global growth from U.S. President Donald Trump's policy moves adds to worries over weak domestic earnings and persistent foreign outflows.
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