RBI’s move to principle-based authentication

The Reserve Bank of India (RBI) is taking a proactive approach to combat financial fraud in digital transactions by proposing a principle-based authentication framework. With online fraud cases in India reaching alarming numbers, amounting to Rs 7,488.6 crore in 2023 alone, there’s a pressing need to revamp existing security measures.


OTP Challenges and Vulnerabilities:

One of the long-standing methods in financial transactions is the use of One Time Passwords (OTPs) for authentication. However, despite its widespread use, instances of fraud have highlighted its vulnerabilities. For example, between 2022 and 2023, over 95,000 UPI transactions were compromised, showcasing the shortcomings of OTPs. Fraudsters have been able to exploit these vulnerabilities through social engineering and phishing attacks, underscoring the necessity for more robust authentication methods.

RBI’s Principle-Based Approach:

Recognizing the limitations of SMS-based OTPs, the RBI proposes a principle-based framework to broaden authentication options. This approach grants regulated entities the flexibility to explore alternative methods beyond OTPs, such as app-based approval and biometric authentication. By allowing innovation while maintaining strict security standards, the RBI aims to foster a more secure digital payment ecosystem.

TruSense – A Solution for Secure Authentication

TruSense is already offering a Telco-based authentication service. TruSense advocates for the removal of PINs from non-transactional authentication processes, replacing them with the Mobile Number Verify (MNV) method. MNV silently verifies the user’s phone number linked to their account, mitigating the risk of PIN hijacking and ensuring a secure authentication process.

Additionally, TruSense offers TruScore , a comprehensive fraud mitigation solution. By leveraging Telco-derived data points, including SIM swap detection and portability detection, TruScore enables real-time risk assessment for BFSI providers. This empowers them to swiftly detect and respond to potential fraudulent transactions, safeguarding customers’ financial interests. TruScore enhances the risk assessment process enabling BFSI providers can make real-time decisions when detecting potential red flag transactions, minimizing the impact of fraudulent activities

The Role of Principle-Based Authentication

The RBI’s principle-based approach allows regulated entities to choose authentication methods beyond OTPs while maintaining stringent security standards. This flexibility encourages businesses to explore innovative solutions that provide customers with a secure environment for conducting digital transactions. By issuing separate instructions for the implementation of this authentication framework, the RBI ensures its proper adoption.


The RBI’s initiative to introduce a principle-based authentication framework marks a pivotal advancement in securing digital transactions. By embracing alternative authentication methods and leveraging solutions like MNV and TruScore, BFSI providers can fortify their defenses against evolving fraud tactics. As the digital payment landscape evolves, prioritizing security measures becomes paramount to safeguard customer trust and financial integrity. Through the adoption of innovative authentication methods, businesses can offer users a secure environment for conducting digital transactions, ensuring peace of mind and protecting against financial risks.