'Things will only get worse, thanks to AI...': Zerodha's Nithin Kamath has a request for SEBI

A day after the Reserve Bank of India (RBI) announced an exclusive ‘.bank.in’ internet domain for all Indian banks to prevent digital financial frauds, Zerodha founder and CEO Nithin Kamath has a new request for the Securities and Exchange Board of India (SEBI) -- to tackle the rising menace of fake apps that mimic banks, brokers, and payment apps. 

Taking to X on Saturday, Kamath shared how cyber frauds are here to stay and will only get worse, courtesy the numerous possibilities of artificial intelligence. "The sheer number and variety of digital frauds is astounding. It's fair to assume that things will only get much worse from here, thanks to AI. Both SEBI and RBI are trying to educate people and implement measures to combat these frauds," he said. 

A "phishing scam via fake apps" refers to a cybercrime where apps that appear legitimate, often mimicking well-known brands, are created to trick users into providing sensitive personal information like login credentials, credit card details, or other sensitive data. 

He further highlighted a consultation paper by SEBI that proposes "unique UPI IDs for brokers to ensure that investors transfer money only to SEBI-registered brokers and not to scammers using UPI IDs with broker names". The move will enable investors to identify “legitimate” SEBI-registered market entities.

"Another major nuisance, apart from payment and website fraud, is the proliferation of fake apps that mimic banks, brokers, and payment apps. Something needs to be done about these apps too," he noted. 

This is not the first time the Zerodha CEO has flagged cyber frauds or phishing scams that are run via fake apps and websites. In a similar tweet on November 18, 2024, Kamath gave two thumb rules to protect unsuspecting users: one, never act in a hurry and always verify; two, if something seems too good to be true, it probably is. 

In response to Kamath's Saturday’s post, a user, who goes by the handle @LifeThruBook, commented that a multi-layered approach of stricter app store policies, real-time AI-based detection and official app directories is required to tackle the fake app issue. 

During his first Monetary Policy Committee (MPC) meeting on Friday, RBI Governor Sanjay Malhotra stressed the urgent need to strengthen cybersecurity measures amid increasing cases of phishing scams and online banking frauds. As per the RBI, all Indian banks will be required to migrate to the 'bank.in' domain from April 2025 to help customers distinguish legitimate banking websites from fraudulent ones.