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Besides, it has also proposed a ‘switch on’ and ‘switch off’ facility for all digital payment modes. This facility would help bolster consumer confidence and contribute towards controlling frauds in digital payment transactions, the RBI Annual Report said.

A ‘kill switch facility’ is a mechanism that allows a system, device, account, or service to be shut down, disabled or blocked immediately in an emergency or under specific conditions.

The proposal for a ‘Kill switch’, which is being examined by the government and the RBI, envisages, among other possibilities, an emergency button integrated into payment applications of lenders that could instantly freeze all banking operations when a user suspects they are being targeted by fraudsters.

In digital arrest scams, fraudsters impersonate law enforcement officials from the police, or other law enforcement agencies, via video calls, claiming victims are under investigation for serious crimes.

Using leaked personal data for credibility, they create fear and urgency, keeping victims on calls for hours with fake IDs and arrest warrants. Victims are coerced into transferring large sums to avoid arrest.

Victims across India are believed to have collectively lost nearly Rs 3,000 crore to digital arrest scams, prompting the Supreme Court to take suo motu cognisance of the issue last October.

The menace of “digital arrests” and fraudulent fund transfers targeting gullible people has continued despite awareness campaigns by regulators and the government. If someone suspects request for transfer of funds is fraud or not genuine, they can activate the kill switch through the bank app on the mobile phone to stop money transfers instantly.

Customers currently have the option to switch domestic and international card transactions on or off, enabling them to exercise greater control over the usage and security of their cards. The RBI said this feature has helped customers manage risks more effectively by allowing them to activate payment services only when required.

The RBI, in its Annual Report, said it will explore extending a similar “switch on/switch off” facility to all digital payment modes, including UPI, internet banking and other electronic payment channels. The move is aimed at strengthening customer protection, enhancing security against fraud and giving users greater flexibility and control over digital transactions.

The “switch on-switch off system” referred to by the RBI is a proposed security feature for digital banking and payments that allows customers to temporarily turn certain banking services on or off whenever they want. It works somewhat like a “kill switch” for banking access. A customer could use a banking app, internet banking or SMS to switch off UPI transactions, debit or credit card usage, internet banking access, international transactions and ATM withdrawals, and later switch on the service only when needed.