India’s Central Bank To Require A Second Identifier For ATM Transactions

Bank customers in India soon will have to use a second identification method to conduct ATM transactions, according to G Gopalakrishna, executive director at Reserve Bank of India.

Speaking at a technology summit organized by the Indian Banks’ Association, Gopalakrishna cited the sharp drop in online fraud after the central bank in 2009 started requiring credit cardholders to use a second identifier for online transactions (see story).

The additional authentication includes online-verification schemes from card companies such as Visa Inc. that require consumers to enter passwords at online checkouts or that redirect transactions to bank websites where customers enter their online-banking passwords.

For ATM transactions, Gopalakrishna suggested the use of dynamic number generation to serve as a second identifier to the card personal identification number already used. In India, certain banks deploy dynamic number generation for extra security by giving customers a digital security token that generates a random number after fixed intervals. Clients then use key in those codes to access their asset-management platforms, for example.

To accommodate dynamic number generation, the country’s ATMs would require software modifications, Gopalakrishna said.

He declined to comment much more on the topic, noting only that the central bank would introduce a regulation addressing the need for a second identifier for ATM transactions by the end of the year.

The central bank regularly introduces measures to protect banking customers in India. In December, for example, the bank began requiring credit cardholders to enter a passcode whenever they make a transaction by phone (see story).

A month later, it ordered India’s banks to require cardholders to enter a PIN for each transaction they conduct at an ATM (see story). Previously, cardholders could conduct multiple ATM transactions by punching in their PINs only once.