The Parliamentary Standing Committee on Finance submitted the report and criticised the existing compensation system as overly complex and inefficient. It highlighted how the current mechanism burdens victims with proving the link between cybercrime incidents and their financial losses, often leaving them vulnerable during prolonged resolution periods.
“…the current compensatory mechanism for victims of cybercrime in the financial sector has limited scope and coverage. The process of filing a compensation claim is complex and time-consuming… In relation to reported cases of alleged cybercrime frauds, it is observed that despite the efforts of stakeholders, the recovery rate of defrauded amount is not very encouraging,” the report stated.
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The committee observes that “the delays in resolving cases may not fully protect consumers from the immediate financial impact of cybercrime.”
Indians have lost a staggering ₹11,333 crore in the first nine months of 2024, according to data from the Indian Cyber Crime Coordination Centre (I4C), a division of the Ministry of Home Affairs.
The Worst Offenders
Stock trading scams: ₹4,636 crore lost, 2,28,094 complaints
Investment-related scams:
₹3,216 crore lost, 1,00,360 cases
Digital arrests: ₹1,616 crore, 63,481 complaints
According to The Indian Express report, data from the Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS) shows that of the 12 lakh cyber fraud complaints recorded this year, 45% originated from Southeast Asian countries, including Cambodia, Myanmar, and Laos.
This is nearly 40% of all complaints documented by the CFCFRMS since its inception in 2021. Since then, Indians have cumulatively lost ₹27,914 crore to cyber fraud. The losses this year account for 40% of all money lost to cyber fraud in the past three-four years.
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Compounding these issues is the fragmented structure of India’s cyber security framework. The committee in its report has pointed out the problems with the existing decentralised approach, where multiple agencies—such as the National Cyber Security Coordinator (NCSC), Ministry of Electronics and Information Technology (MeitY), and the Indian Computer Emergency Response Team CERT-In)—handle different aspects of cyber security. It notes that this fragmentation can lead to “inefficiencies, regulatory overlaps, and delays in response to emerging cyber risks.”
The committee strongly recommends establishing a centralised Cyber Security Protection Authority, akin to the Directorate General of Civil Aviation (DGCA) in the aviation sector. Such a body would ensure a unified and coordinated response to the growing scale of cyber threats while enforcing compliance, particularly in critical areas like banking and telecom.
Moreover, the report states that the current system remains largely reactive rather than proactive. It states, “The current system, despite its provisions, still relies on a reactive approach,” leaving customers obligated to report unauthorised transactions and often waiting for lengthy investigations before receiving compensation.
The committee also recommends automating the compensation process to address these challenges, enabling financial institutions to initiate compensation without delay. It also recommends implementing a dual display of transaction amounts—numeric and written word formats—for online payments.
Also read: Digital Arrests: Mass awareness & stringent action are the need of the hour, say cops and lawyers
