AI vs Fraud: RBI and NPCI Enhance Cyber Scam Defenses in India

India's rapid digital payment growth has led to a surge in financial fraud, prompting regulators and financial institutions to adopt artificial intelligence (AI) for enhanced security. In 2024-25, over 18,000 crore digital transactions were recorded, with UPI volumes rising 137% to ₹200 trillion. However, this shift has also increased risks.


From April 2024 to January 2025, India reported 24 lakh digital fraud cases, resulting in losses of ₹4,245 crore—a 67% increase from the previous year. User vulnerabilities and compliance gaps have made it easier for cybercriminals to exploit the system.


To combat these issues, the Reserve Bank of India launched MuleHunter.AI to identify mule accounts, while the National Payments Corporation of India (NPCI) is piloting a federated AI framework for real-time fraud detection. Mastercard's decision intelligence platform also analyzes transactions to block unauthorized payments.
Despite the benefits of AI, challenges like false positives and data privacy concerns remain. Experts advocate for integrating AI into zero-trust architectures and fostering collaboration among regulators, banks, and technology providers to enhance defenses against evolving digital threats.
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