Digital rupee launch may help curb bank frauds

According to the experts, RBI’s plan to roll out a digital rupee can help curb bank frauds, and increase transparency in the financial system, including the lending process. As per the data of RBI’s annual report released in August, 2020, frauds in Indian banking sector grew 159% in 2019-20, involving misappropriation of around Rs. 1.85 trillion, up 2.5 times from the year-earlier. However, while a digital currency will help bring down the number of fraudulent transactions, it cannot be eliminated entirely, the report added.

Rajesh Dhuddu, practice leader, blockchain and cybersecurity, Tech Mahindra, said, “In spite of having online banking, UPI or RTGS has not triggered behavioural change in people, because the system is not capable of tracking the transactions. Today, electronic payments are nothing but a digitized version of your paper currency. Nothing prevents a person to transfer money in electronic format and, then at the last mile, convert it into cash and hide it.”

Kumar Gaurav, founder and chief executive of crypto banking platform Cashaa, said money is now created either through the central bank’s monetary supply or through lending, which is carried out between banks and corporates. “The distribution and safeguarding of money is what banks have been created for. The moment you create a CBDC (central bank digital currency), where the supply of money is visible publicly, you won’t need the bank to safeguard that anymore.”