Here’s Why India Faced Disruption in Banking OTP Services

Implementation of the second phase of new SMS regulations by telecom companies caused the disruption.

India’s OTP Services crashed during implementation of the second phase of SMS regulation. Image used for representational purposes only.

(Photo Courtesy: iStock)

The implementation of the second phase of new SMS regulations by telecom companies in India on Monday, 8 March, resulted in disruption of crucial SMS services like OTPs from banks and e-commerce companies.

Several people struggled to receive one-time passwords for critical services like bank transfers and e-commerce payment services.

According to a report by The Economic Times, the Aadhaar authentication service also crashed. “We are unable to reach authentication service to serve you OTP. Please try again later,” said a notice on the official Aadhaar website.

What Happened

The newly imposed SMS regulation by the Telecom Regulatory Authority of India (TRAI) moved into its second phase on 8 March. However, the implementation of these guidelines disrupted OTP services.

Several users took to Twitter to complain about not receiving OTPs while making online payments.

Paytm users did not receive OTP.

Axis bank users could not add beneficiary details due to delay in OTP service.

SBI users also did not receive OTP messages.

New Rules and Regulations

In February, the Delhi High Court had directed TRAI to enforce Telecom Commercial Communication Customer Preference Regulation (TCCCPR), which was designed to stop the problem of ‘unsolicited commercial communication (UCC) or spam call and messages’, reported The Hindu.

These guidelines were implemented so that the use of fake SMS headers by scammers to dupe customers is stopped.

SMS headers are a combination of six characters representing the company name of the message sender. These headers are also known as Sender ID.

According to TRAI’s latest guidelines, every SMS must be verified before it is delivered.

Why Was There a Disruption in OTP Delivery?

Telecom operators blamed Distributed Ledger Technology (DLT) companies as the reason for OTP disruption in the country.

According to TRAI, telemarketers should register themselves on the DLT platform. These companies are meant “to control the SMS spam from various marketing firms.”

Independent Internet researcher Rajshekhar Rajaharia told The Quint, “There are two types of SMS messages – transactional and promotional. Each SMS is now being vetted by DLT companies.”

“DLT companies should have started a trial run with promotional SMS services first. Only after that, they should have implemented transactional services because these services are important and one cannot afford to stop receiving crucial SMS-based services such as OTPs.”

Rajshekhar Rajaharia, Internet Researcher and Cyber Security Expert

Meanwhile, telecom operators defended their systems and blamed DLT companies, who they said had failed to comply with these regulatory standards.

“Close to 50% traffic is getting dropped because of content scrubbing. Officials from India’s top banks including HDFC and SBI are extremely furious and dialling TRAI to address the mess at the earliest,” a top executive at a leading telemarketing firm told The Economic Times.

‘Golden Opportunity for Cybercriminals’

With several people not receiving OTP messages, chances of cyber fraud have increased. “Scammers might make any transactions on your account and you would not receive any messages,” said Rajaharia.

Here’s how to stay safe:

• Frequently check your account balance by dialling the toll-free number of your bank.
• Install your bank’s internet banking application and review your account activity.
• In case of any emergency, visit your nearest bank or call the customer care service.