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Finance Ministry Directs Public Sector Banks to Review IT Systems and Disaster Recovery Channels


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The Union Finance Ministry (FinMin) has directed public-sector banks (PSBs) in India to review their information technology (IT) systems, particularly their disaster recovery channels. This directive was given by a senior government official who requested anonymity. The Reserve Bank of India (RBI), the country’s regulator, conducts regular audits, and the government has asked major PSBs to assess their disaster recovery channels, which are used to maintain data in parallel.

The purpose of evaluating these channels is to ensure that in the event of one channel becoming non-functional, the backup channel will automatically activate without causing any disruptions for customers. The official explained that if a bank based in Mumbai stores its backup data in another seismic zone, this setup would provide a reliable disaster recovery solution. However, implementing such a system requires significant investment. Despite a query sent to FinMin, there has been no response at the time of reporting.

The recent focus on testing the disaster preparedness of various segments of the financial market has gained prominence. On May 18, Indian stock markets, including BSE and NSE, conducted special trading sessions in the equity and derivative segments to assess their disaster preparedness in case of major disruptions. These exchanges underwent an intraday switch from the primary site to the disaster recovery site during the session.

Initially, major banks like State Bank of India (SBI), Bank of Baroda, and Canara Bank were asked to evaluate their disaster recovery systems, and the outcomes were positive. The government official mentioned that they will also examine other PSBs in this regard.

On May 9, the Chairman of SBI, Dinesh Khara, announced that the bank was in the process of recruiting around 12,000 individuals for various positions, including IT. Khara stated that these new recruits would initially gain exposure to banking operations and could later transition to IT and other related roles. He mentioned that a significant percentage of the bank’s associate-level and officer-level employees are engineers.

In an interview earlier this month, the Chief Executive Officer of Punjab National Bank (PNB), Atul Kumar Goel, highlighted the bank’s focus on digital and human resources transformation, which has strengthened their cybersecurity systems over the past year. SBI’s digital adaptation has increased from 84% in FY23 to 89% in FY24. Canara Bank witnessed a 48.1% year-on-year surge in digital transactions during FY24, while PNB experienced a 62% year-on-year jump in the same year. Bank of Baroda achieved a total digital transaction rate of 94% in FY24.

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