Telcos, banking, fintech firms warn of AI risks in spam crackdown amid clash

The Telecom Regulatory Authority of India (Trai) is seeking to keep a crisis at bay, which saw spam complaints triple to 2.5 million last year from 2021, according to data tabled in the Lok Sabha in February by the Department of Telecommunications. However, its proposal to empower telecom networks to automatically penalize senders based on AI assistance has pitted traditional banks like HDFC Bank Ltd, startups like PhonePe and logistics firm DHL Express India against the regulator.

“AI-based detection may result in false positives, particularly for high-volume legitimate banking communication,” Rahul Prasad, vice- president—data privacy officer at HDFC Bank, told the telecom regulator in an email on 13 April. “A ‘one-size-fits-all’ approach is too harsh for legitimate high-volume senders who may reach thresholds due to technical glitches or legitimate peak-hour customer service needs,” PhonePe said in its response to Trai’s proposal.

Trai in the draft regulations said that the chances of false positives from AI need to be minimised by corroborating such intelligence with the evidence.

A dispute is erupting over the price of communication, too. Telecom operators are pushing for steep surcharges on bulk calls to make spamming unprofitable, a move that bodies from the digital sector say will unfairly tax legitimate enterprises and increase costs for consumers.

The standoff highlights the complexities of India’s digital-first economy, where the government’s desire to protect citizens from as many as 13 daily fraudulent messages per person, as per McAfee’s February 2026 State of the Scamiverse report, comes up against the realities of high-volume, legitimate financial business.

Trai's new proposal changes this by turning AI into an active enforcer. If an AI system flags a number as suspicious, operators need to take action against the sender after receiving just three unique customer complaints within 10 days.

Telecom operators too echoed the concerns of the banking and financial services industry pertaining to risks of AI systems. On Monday, Bharti Airtel told the regulator that AI-driven enforcement must be grounded in clear evidence and remain balanced. The telecom giant argued that penalties should only be triggered when there is high-certainty proof of spam, ensuring the process is accurate, legally sound, and avoids mistakenly blocking legitimate communications.

High-confidence spam cases would be those where strong and corroborated evidence of spam behaviour is present, Reliance Jio said.

The Fintech Association for Consumer Empowerment (FACE), which represents over 380 financial services companies, has also sought the reinstatement of ‘inquiry’ within the definition of a customer relationship, noting that users who initiate but do not complete transactions have demonstrated intent to be contacted. This is because Trai has proposed removing the term ‘inquiry’ to prevent spammers from exploiting it as a loophole for sending unsolicited calls, but the association said that users who drop off during digital applications have shown clear intent to gather information, making follow-up calls a necessary service rather than promotional spam.

The draft has also ignited a sharp commercial dispute over proposed deterrent charges on Application-to-Person (A2P) communications such as robocalls.

Telecom operators have pushed for steep penalties to make bulk telemarketing economically unviable, with some advocating charges as high as 50 paise per minute for voice calls and opposing any exemptions for designated commercial number series.

Telcos have also recommended an additional charge, e.g., 5 paise per call attempt, ensuring spammers pay for the network load and consumer nuisance they cause at the moment they initiate the call, even if the user doesn't answer.

In contrast, financial institutions and digital industry bodies warn that increased compliance costs could ripple across India’s fast-growing digital economy.

The Internet and Mobile Association of India (IAMAI) warned that the proposed levies would create a major financial burden if service providers shift these costs onto businesses. The association said the pricing should remain a private contractual matter between companies rather than a regulatory mandate, urging Trai to let market forces and mutual agreements manage commercial terms.

Telecom operators have also opposed the regulator's proposal to exempt the 1400 and 1600 number series from the new deterrent termination charges. They want these series fully under the ambit of the penalties.

Another point of contention is the proposed curbs on call-filtering apps, which would stop them from tagging verified commercial numbers such as 1400 and 1600 as spam. Telecom operators such as Bharti Airtel support the move, saying it can block legitimate messages like OTPs and alerts, while IAMAI has opposed it as regulatory overreach, saying it is a subversion of consumer choice and that the functionality of any call management application or similar services, such as OTT apps, does not come under the purview of Trai.