Digital Banking and Financial Technology
What the exam tests here
Channels and rails - UPI, IMPS, NEFT, RTGS, AePS, cards, wallets, BBPS - plus the security and liability rules that follow fraud. Expect both factual and scenario items.
Core rules and concepts
- UPI is run by NPCI; a Virtual Payment Address replaces account details. The UPI PIN authenticates a debit only - you never need a PIN to receive money.
- IMPS works 24x7 through mobile and net banking; AePS uses Aadhaar plus biometric authentication at a micro-ATM; *USSD 99# works without internet.
- Cards: EMV chip with CVV, and additional-factor authentication is mandatory for domestic card-not-present transactions; card tokenisation replaces the card number with a token.
- Digital lending rules require the regulated entity to be named in the app, prohibit automatic access to contacts and media, and mandate a Key Fact Statement.
- Security threats: phishing (email), vishing (phone), smishing (SMS), SIM-swap, QR-code manipulation and OTP interception.
- CBDC (digital rupee) is legal tender issued by RBI - it is not a cryptocurrency.
Worked example
A customer's SIM is swapped and ₹40,000 is debited through UPI OTPs. He reports it to the bank the next working day. Reasoning: the customer neither shared nor authorised anything, and reported within 3 working days, so liability is zero; the bank must credit the amount within 10 working days or pay ₹100 per day thereafter. Had he reported after 7 working days, liability would follow the bank's board-approved policy.
Traps that cost marks
- Saying a UPI PIN is needed to receive money.
- Quoting RTGS below ₹2 lakh or IMPS as branch-only.
- Treating the digital rupee as a private cryptocurrency.
- Assuming full liability always falls on the customer in fraud cases.