RBI Directs Banks to Use Financial Fraud Risk Indicator (FRI)

Recently, the Reserve Bank of India (RBI) issued an advisory directing all commercial and cooperative banks to integrate the Financial Fraud Risk Indicator (FRI) into their systems. 

• This move aims to prevent cyber-enabled financial frauds by leveraging inter-agency collaboration between the Department of Telecommunications (DoT) and financial institutions.
  

What is the Financial Fraud Risk Indicator (FRI)?

• Launch: Introduced by DoT’s Digital Intelligence Unit (DIU) in May 2025.
• Function: The FRI is a risk-based metric that classifies mobile numbers based on their likelihood of being involved in financial fraud.
  • Risk Categories: Medium, High, or Very High risk.
  • Data Inputs: Information is derived from multiple sources such as the National Cybercrime Reporting Portal (NCRP), DoT’s Chakshu platform, and intelligence from banks and financial institutions.
  • Use Case: The FRI helps in identifying mobile numbers that are linked to cybercrime or financial fraud, enabling real-time preventive measures.

How does the FRI work?

• Data Collection: The FRI gathers information from:
  • The Indian Cyber Crime Coordination Centre (I4C).
  • Reports from banks, NBFCs, and UPI service providers.
  • The Mobile Number Revocation List (MNRL), maintained by DoT.
• Revocation List: The MNRL includes numbers disconnected due to:
  • Links to cybercrime activities.
  • Failure in re-verification.
  • Misuse for financial frauds.
• Collaboration: The FRI system is designed to allow stakeholders such as banks, NBFCs, and UPI providers to take immediate action (e.g., blocking transactions, issuing alerts).

Impact of the FRI on Cyber Fraud Prevention

• Improved Fraud Prevention: By prioritizing enforcement, banks can take preventive actions based on real-time risk data from the FRI.
• Collaboration Between Sectors: The integration of telecom intelligence with banking workflows enhances sector-wide coordination, making fraud detection faster and more efficient.
• Telecom and Banking Integration: The API-based integration between banks and DoT’s DIP (Digital Intelligence Platform) enables automated and continuous feedback to refine fraud risk models.
• Enhancement of Digital Trust: The implementation of FRI builds trust in India’s digital financial ecosystem, encouraging the safe adoption of payment methods like UPI.

Strategic Importance of FRI

• Real-Time Fraud Detection: With the rising popularity of UPI as a payment system, the integration of FRI can significantly reduce cyber frauds targeting millions of citizens.
• Sector-Wide Standard: As more institutions adopt the FRI, it is expected to become a sector-wide standard, further enhancing India’s digital security infrastructure.
• Digital India Vision: The initiative aligns with the Digital India vision by promoting technology-led solutions for cyber fraud prevention.

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