Concerned over rising incidents of cyber frauds, the RBI will soon ask banks to shift to chip- based ATM cards from the existing magnet strips ones and upgrade the currency vending machines.
The RBI working group on information security, electronic banking and technology risk management has also made a case for setting up special cells on banking frauds in the state police departments to deal with bank related cyber crimes.
While pitching for chip-based cards, it is difficult to copy and make their duplicates as compared to the existing magnet strips ones, which are currently used.
Besides, the working group has recommended widespread changes in the existing IT system of the Indian banking industry to make banking services more safe and secure.
In case of online frauds where jurisdiction is not clear and there is ambiguity on where the police complaint should be filed, the working group has recommended setting up separate cell on bank fraud in police departments.
It has also suggested that for debit or credit card transactions at the POS (point of sale) terminals, PIN-based authorisation should be put in place instead of the signature-based system. The non-PIN based POS terminals, should be withdrawn in a phased manner.
The RBI had set up the working group in April 2010 to suggest guidelines for banks covering the entire gamut of electronic banking.
On cloud computing, the report said security and legal issues on it are still evolving and "a bank needs to be cautious and carry out due diligence to assess the risks comprehensively before considering cloud computing."
Cloud computing, which is internet-based, facilitates software applications and other technological resources to be shared online.
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