FinMin asks PSU banks to take measures to strengthen cybersecurity
The Finance Ministry has issued directives to state-owned banks to conduct a comprehensive review of their systems and processes concerning digital operations in light of a recent incident involving UCO Bank. According to sources, these banks have been strongly advised to assess the robustness of their cybersecurity measures and implement steps to enhance their overall security posture.
The guidance emphasizes the need for banks to maintain a vigilant stance and underscores the importance of preparedness to counter potential future cyber threats. The Finance Ministry, in coordination with the Reserve Bank of India (RBI), has been consistently emphasizing the critical nature of cybersecurity for banks, particularly given the increasing digitization trends in the financial sector.
As the financial landscape continues to evolve with a greater reliance on digital platforms and technologies, safeguarding against cyber threats becomes paramount. These proactive measures and regular sensitization efforts by regulatory authorities aim to ensure the resilience of the banking sector against the ever-evolving landscape of cyber risks. It reflects a broader industry-wide commitment to reinforcing cybersecurity frameworks to protect financial institutions and their customers from potential vulnerabilities and attacks.
The Kolkata-based public sector lender, UCO Bank, recently faced a significant issue involving the erroneous credit of Rs 820 crore to account holders through the Immediate Payment Service (IMPS). The incident occurred between November 10 and November 13 when the bank identified technical glitches in its IMPS system.
As a result of these technical issues, certain transactions initiated by account holders from other banks led to the incorrect crediting of funds to the accounts of UCO Bank customers. Notably, the error involved the crediting of funds without the actual receipt of money from the respective banks initiating the transactions.
Such incidents highlight the critical importance of robust technical infrastructure and operational checks in the banking sector, especially when it comes to digital payment systems. UCO Bank’s prompt identification of the issue and public disclosure are steps towards transparency and addressing the concerns arising from the technical glitch. It is likely that the bank will undertake corrective measures and strengthen its systems to prevent similar incidents in the future.
Regulatory bodies, including the Reserve Bank of India (RBI), typically work closely with banks to investigate such occurrences and ensure that corrective actions are taken promptly. The incident also serves as a reminder for financial institutions to continually assess and enhance their technology infrastructure to maintain the integrity and security of digital financial transactions.
The Immediate Payment Service (IMPS) is a real-time interbank electronic funds transfer system known for its seamless and swift transactions without manual intervention. In the recent incident involving UCO Bank, it was reported that due to technical issues in the IMPS system, certain transactions initiated by holders of other banks resulted in the erroneous crediting of Rs 820 crore to the accounts of UCO Bank customers.
To address the situation, UCO Bank took swift action by blocking the recipients’ accounts and has successfully recovered Rs 649 crore out of the total amount, accounting for approximately 79 percent of the erroneously credited funds. This recovery indicates the bank’s effective response in mitigating the impact of the technical glitch.
As of now, the state-owned bank has not provided clarity on whether the technical glitch was a result of human error or a potential hacking attempt. Nevertheless, the bank has taken a proactive approach by reporting the matter to law enforcement agencies. This step is crucial in initiating investigations and necessary actions to determine the root cause of the incident, ascertain any potential security vulnerabilities, and prevent such occurrences in the future.
The incident underscores the importance of robust cybersecurity measures in the financial sector, especially in systems handling real-time electronic funds transfers. Regulatory bodies and law enforcement agencies will likely collaborate with UCO Bank to conduct a thorough investigation and ensure that corrective actions are implemented to prevent similar incidents.
