Business
RBI mandates time‑based auto‑locking OTP for high‑value online banking transactions
The Reserve Bank of India has directed banks to introduce a time‑based auto‑locking OTP system for large online transactions to curb cyber fraud.
The Reserve Bank of India (RBI) has issued a directive for all scheduled commercial banks to implement a time‑based auto‑locking one‑time password (OTP) mechanism for high‑value online banking transactions. The move aims to strengthen security for customers conducting large digital payments.
The RBI’s decision comes amid a surge in cyber‑fraud incidents targeting online banking users, with fraudsters exploiting weak authentication for substantial transfers. By enforcing a dynamic OTP that locks after a short validity period, the regulator seeks to reduce the window of opportunity for unauthorized access.
Under the new framework, banks must generate OTPs that expire within a predefined time frame and automatically lock the transaction if the code is not entered promptly. The system will trigger additional verification steps for transactions exceeding a threshold amount, ensuring that only the legitimate account holder can complete the payment.
The RBI expects the enhanced OTP protocol to deter fraudulent activities, protect consumer funds, and restore confidence in digital banking channels across the country.
The RBI’s decision comes amid a surge in cyber‑fraud incidents targeting online banking users, with fraudsters exploiting weak authentication for substantial transfers. By enforcing a dynamic OTP that locks after a short validity period, the regulator seeks to reduce the window of opportunity for unauthorized access.
Under the new framework, banks must generate OTPs that expire within a predefined time frame and automatically lock the transaction if the code is not entered promptly. The system will trigger additional verification steps for transactions exceeding a threshold amount, ensuring that only the legitimate account holder can complete the payment.
The RBI expects the enhanced OTP protocol to deter fraudulent activities, protect consumer funds, and restore confidence in digital banking channels across the country.