By Nihit Nagpal and Anuj Jhawar
In general parlance, “financial fraud” refers to a situation where a person is duped of his money dishonestly or mischievously. The significant rise in online payments through UPI and Internet Banking has also led to an increase in instances of cyber financial frauds. The Reserve Bank of India (“RBI”) has recognized the issue of cyber financial fraud and introduced a Master Circular titled “Master Directions on Fraud- Classification and Reporting by Commercial Banks and select FIs” (hereinafter referred to “Circular”) on July 01, 2016.
The RBI has classified financial fraud into various categories such as Misappropriation and Criminal Breach of Trust, Fraudulent Encashment through forged instruments, manipulation of books of account or through fictitious accounts and conversion of property, unauthorized credit facility extended for reward or illegal gratification, cheating and forgery, fraudulent transactions involving foreign exchange, or any other type of fraud not coming or specified as above. As per Rule 2.2 of the Circular, these acts shall be read into various provisions of the Indian Penal Code, 1860 (“IPC”) and as such shall be an offence. In addition to these guidelines, the government has taken some important steps and has formulated a mechanism for reporting cyber financial fraud such as I4C Scheme, etc.
What is I4C Scheme?
In order to tackle the rising cyber financial fraud, the Government of India launched Indian Cyber Crime Coordination Centre in 2019, which is also known as “I4C Scheme”. This Scheme was launched under the aegis of Ministry of Home Affairs and it established various centres and units for the investigation and identification of cyber-crimes such as National Cybercrime Threat Analytics Unit (TAU), National Cybercrime Reporting, Platform for Joint Cybercrime Investigation Team, National Cybercrime Forensic Laboratory (NCFL) Ecosystem, National Cybercrime Training Centre (NCTC), Cybercrime Ecosystem Management Unit, and National Cyber Crime Research and Innovation Centre.
In case a cyber-financial fraud is committed, then the victim can report the incident by calling at 1930 or the victim can lodge a formal complaint on the National Cyber Crime Reporting Portal (www.cybercrime.gov.in).
Procedure for lodging a complaint on National Cyber Crime Reporting Portal
In case a financial cyber fraud takes place, then the victim can access the portal (www.cybercrime.gov.in) and will have to get themselves registered as a new user. Upon successful registration, the user will be required to click “Report Cyber Crime” and thereafter will be required to select the state in which the complaint would be lodged. As per RBI Circular on “Frauds: Classification and Reporting” the complaint is marked to the cyber cell and accordingly an FIR is also lodged at police station where the offence is alleged to have been committed. It is pertinent to note that there is no legislation which specifically provides for cyber financial fraud as a separate class of offence. However, as per previous RBI Circulars, in such cases, the provisions of IPC would be invoked while registering such cases.
Whenever financial fraud is committed either through online mode or otherwise, time is of the utmost essence, and the RBI guidelines require the person to report the same as soon as possible. It is settled that the law favours the vigilant and does not come to rescue the one who slumbers upon his rights. If the victim quickly reports the commission of fraud, then as per I4C Scheme, the chances of recovery of duped amount are higher.
Remedies available if FIR is not lodged or no action is taken upon filing of the complaint
There may be an instance where despite the filing of a complaint on the Online Portal, no FIR is lodged or no action is taken. In such cases, the victim shall have the right to approach the Superintendent of Police under Section 154(3) of the Criminal Procedure Code, 1973 (“CrPC”) for the lodging of FIR. Further, if no action is taken, the victim can approach the Judicial/Metropolitan Magistrate under Section 156(3) of CrPC and seek a direction to the police for the lodging of FIR. The significance of lodging an FIR is that it sets the criminal procedure in motion and the police would be required to carry out an investigation. In cyber financial fraud, it is the cyber cell of the police which looks into such cases.
The existing legislations do not categorise the acts of cyber financial frauds as a separate offence, however, the RBI Circulars imply that such offences can be read within the meaning of various offences existing in IPC and Information Technology Act, 2000. Recovery of the duped amount is of utmost importance and a speedy recovery is the best relief that a victim can get. It is because of this reason I4C Scheme was launched by the government keeping in mind that justice delayed is justice denied. Apart from the recovery of the amount, the trial can be initiated against the perpetrator under the penal laws of the country in order to ensure complete justice.
 RBI’s Master Directions on Fraud- Classification and Reporting by Commercial Banks and select FIs, RBI/DBS/2016-17/28
 Indian Cyber Crime Coordination Centre (I4C) Scheme, available at https://www.mha.gov.in/division_of_mha/cyber-and-information-security-cis-division/Details-about-Indian-Cybercrime-Coordination-Centre-I4C-Scheme
 RBI Circular on Frauds: Classification and Reporting, RBI/2009-10/58 available at: https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=5111#3