Fighting Cyber Fraud in India: Understanding the Financial Fraud Risk Indicator (FRI)

 

Fighting Cyber Fraud in India: Understanding the Financial Fraud Risk Indicator (FRI)

Introduction to the Financial Fraud Risk Indicator (FRI)

The FRI is designed to provide financial institutions with advance actionable intelligence to prevent cyber fraud. 

RMN Digital Report
May 21, 2025

In a significant move to bolster defenses against cyber fraud and financial crime in India, the Department of Telecommunications (DoT) has unveiled the Financial Fraud Risk Indicator (FRI). This innovative tool is an output from a multi-dimensional analytical tool developed as part of the Digital Intelligence Platform (DIP).

The FRI is designed to provide financial institutions with advance actionable intelligence to prevent cyber fraud. Its introduction aims to enhance cyber protection and validation checks for mobile numbers flagged as potentially associated with fraudulent activity, particularly when digital payments are being made to such numbers.

What Exactly is the FRI?

The FRI is a risk-based metric that evaluates and classifies a mobile number based on its likelihood of being involved in financial fraud. Mobile numbers are categorized into Medium, High, or Very High risk levels. This classification is derived from inputs gathered from various stakeholders, including reporting submitted to the Indian Cybercrime Coordination Centre (I4C’s) National Cybercrime Reporting Portal (NCRP), data from DoT’s own Chakshu platform, and intelligence shared by banks and financial institutions. By providing this risk assessment, the FRI empowers stakeholders, such as banks, NBFCs, and UPI service providers, to prioritize enforcement actions and implement additional customer protection measures specifically for mobile numbers identified as having a high risk of fraud.

How Advance Notification Helps Combat Fraud

A key challenge in combating digital fraud is the short lifespan of mobile numbers used by fraudsters. These numbers are often misused for only a few days. While a full verification process can take considerably longer, an advance indicator like the FRI proves incredibly useful.

The DoT’s Digital Intelligence Unit (DIU) already shares a list of disconnected mobile numbers (the Mobile Number Revocation List – MNRL) with stakeholders, citing reasons like involvement in cyber-crime or failed re-verification. These numbers are frequently used in financial frauds.

With the FRI, as soon as a stakeholder flags a suspected mobile number, it immediately undergoes multi-dimensional analysis. The tool then classifies the number’s financial risk level (Medium, High, or Very High) and shares this assessment instantly with all stakeholders through the Data Integrity and Process (DIP) alerts. This swift notification allows financial entities to act quickly before or during a transaction.

Industry Adoption and Collaboration

The banking and digital payments industry is actively integrating the FRI into their systems. PhonePe, one of the leading UPI platforms and an initial adopter, has already used the FRI to decline transactions linked to Very High FRI mobile numbers. PhonePe also displays an on-screen alert as part of its PhonePe Protect feature. Data shared by PhonePe demonstrates the effectiveness of the model, showing a very high predictability that numbers flagged with a soft signal were indeed involved in cyber fraud. PhonePe is also developing proactive user warnings for transactions involving Medium FRI numbers.

Leading UPI platforms such as PhonePe, Paytm, and Google Pay, which collectively handle over 90% of UPI transactions in India, are integrating DIP alerts. Examples of their implementations include introducing transaction delays, displaying alerts, and requiring user confirmations for potentially risky transactions. Other banks are also actively utilizing the FRI data to mitigate cyber frauds.

Given that UPI is the most preferred payment method across India, these interventions have the potential to protect millions of citizens from falling victim to cyber fraud. The FRI facilitates swift, targeted, and collaborative action across both the telecom and financial domains to combat suspected fraudulent activities.

Towards a Secure Digital Financial Ecosystem

The DoT is committed to preventing the misuse of telecom resources through the implementation of national-level technology-driven solutions and collaboration with stakeholders. Their goal is to ensure a secure and safe telecom ecosystem for all citizens. Ongoing engagement with financial institutions and digital payment platforms aims to further optimize alert mechanisms and reduce response times. The integration of the FRI into customer-facing systems is expected to become an industry standard, significantly enhancing the systemic resilience of India’s digital financial ecosystem.