Finance Ministry Directs State-Owned Banks to Strengthen Digital Systems

• 21 Nov 2023

Recently, the Finance Ministry has urged state-owned banks to conduct a thorough review of their digital operations, prompted by the recent UCO Bank incident.

• In response, banks have been advised to assess their cybersecurity measures and implement enhancements to fortify their systems.

Key Points

• Cybersecurity Assessment: State-owned banks are instructed to scrutinize their systems and processes related to digital operations to ensure robust cybersecurity measures are in place.
• Vigilance and Preparedness: Banks are advised to maintain a vigilant stance and prepare for potential future cyber threats, emphasizing the importance of proactive measures.
• Sensitization by Authorities: The Finance Ministry and RBI have consistently sensitized banks about cybersecurity in light of the increasing digitization within the financial sector.
• UCO Bank Incident: UCO Bank, based in Kolkata, reported an erroneous credit of Rs 820 crore to account holders via the Immediate Payment Service (IMPS). Technical issues during November 10-13 resulted in certain transactions crediting UCO Bank accounts without actual funds from other banks.
• Recovery Efforts: The bank promptly blocked the recipients' accounts and has successfully recovered Rs 649 crore, equivalent to 79% of the erroneously credited amount.