Fraud with digital currency will be curbed
The Reserve Bank of India (RBI) plans that introducing digital currency in the country can help curb bank fraud and increase transparency in the financial system, including the lending process.
Banking fraud cases increased 2.5 times
According to the data of the annual report released by the RBI in August, banking fraud cases in India increased by 159% in 2019-20, which is 2.5 times more than a year ago.
Rajesh Dhudu of Blockchain and Cyber Security, Tech Mahindra, said that despite having facilities like online banking, UPI (Unified Payments Interface) or RTGS (Real-Time Gross Settlement), there has been no change in people’s behavior. Because there is no such system in the system that you can monitor transactions. He said that payments being made electronically are nothing but a digital version of paper currency. Today any person can transfer money in electronic format to anyone and then convert it to cash and can also hide it.
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Forensic Advisory, Deloitte K. V. Karthik said that digital currency is effective in reducing fraud, but it will also depend on how India prepares the CBDC structure. Karthik said that two models of CBDC can be adopted.
1. Account based model wherein the transaction is approved by the promoter and the beneficiary based on the identity of the consumer and then the transaction is settled by the central bank.
2. Token based models can also be used in India. In which the promoter and the beneficiary should be approved by the public private key pair and digital signature. There is no need to identify the user in this model. This promotes excessive privacy.