DoT Unveils Financial Fraud Risk Indicator to Strengthen Cybersecurity

In a groundbreaking initiative aimed at fortifying India’s digital finance landscape, the Department of Telecommunications (DoT) has rolled out the Financial Fraud Risk Indicator (FRI)—a powerful new metric designed to combat rising cyber fraud and financial crime. Part of the Digital Intelligence Platform (DIP), the FRI will serve as a cutting-edge tool for banks, NBFCs, and UPI service providers to proactively identify and respond to threats based on risk levels associated with mobile numbers.

What Is the Financial Fraud Risk Indicator (FRI)?

The Financial Fraud Risk Indicator is a risk-based classification tool that assesses mobile numbers and categorizes them under Medium, High, or Very High risk levels based on their likelihood of involvement in financial fraud. This classification is derived through a multi-dimensional analysis that aggregates data from several sources:

• Reports from the Indian Cybercrime Coordination Centre (I4C) via the National Cybercrime Reporting Portal (NCRP)

• Complaints logged on DoT’s Chakshu platform

• Intelligence gathered from banks, NBFCs, and UPI providers

By offering a consolidated risk metric, the FRI enables financial institutions to enforce targeted preventive actions such as transaction alerts, delays, or outright rejections.

The Importance of Advance Risk Notification

The DoT’s Digital Intelligence Unit (DIU) already maintains and shares the Mobile Number Revocation List (MNRL) with stakeholders. This list flags disconnected mobile numbers with known issues such as links to cybercrime, failed re-verification, or regulatory violations.

Since mobile numbers exploited in cyber fraud are typically active only for a short span—often just a few days—the traditional process of verification may lag behind actual usage. This delay opens a window of vulnerability where fraudulent transactions can occur.

To bridge this critical gap, the FRI acts as an early warning system. As soon as a mobile number is flagged by any participating entity, it undergoes automated, multi-dimensional scrutiny. Within moments, its associated fraud risk level is calculated and shared with all DIP-integrated platforms, ensuring real-time response capabilities.

Real-World Implementation: PhonePe Leads the Way

PhonePe has been among the first financial platforms to implement FRI-based interventions:

• Mobile numbers flagged with a Very High FRI are automatically barred from completing transactions.

• Users attempting to transact with such numbers receive immediate on-screen alerts via the PhonePe Protect feature.

• For Medium risk numbers, PhonePe plans to incorporate proactive warnings, enabling users to make informed choices before proceeding.

PhonePe’s internal analysis revealed that the predictive capability of the FRI is highly accurate. Many flagged numbers later turned out to be directly involved in fraud cases, validating the effectiveness of the system.

Broad Industry Adoption and Impact

India’s top UPI platforms—PhonePe, Paytm, and Google Pay—which together handle over 90% of UPI transactions, have begun embedding DIP alerts within their transaction systems. Here are some noteworthy examples:

• A leading platform has instituted transaction delays, which include fraud alerts and require users to confirm before proceeding.

• Several banks are also leveraging DIP alerts to enhance real-time fraud detection mechanisms.

With UPI now being the most popular digital payment method in India, this initiative stands to protect millions of users from cybercriminals. It also enables law enforcement and financial institutions to take swift and coordinated action against fraudulent activity.

A National Vision for Cybersecurity in Fintech

The DoT is steering a comprehensive, technology-driven response to cyber threats. By integrating FRI into financial systems nationwide, the agency is fostering a resilient and secure telecom-financial ecosystem. This collaborative framework between telecom and fintech stakeholders marks a paradigm shift in how fraud is tackled in India.

Going forward, the DoT aims to continue:

• Refining FRI algorithms to improve risk classification

• Increasing stakeholder participation in DIP

• Reducing alert-to-response time in fraud prevention systems

The Financial Fraud Risk Indicator isn’t just a metric; it’s the cornerstone of a new cybersecurity paradigm—one that promises real-time protection, data-driven enforcement, and a safer digital future for India.