The Finance Ministry has instructed state-owned banks to conduct a thorough review of their digital operations in light of the recent UCO Bank incident. Banks are advised to assess their cybersecurity safeguards and implement measures to enhance their resilience, according to sources. Banks should maintain strict vigilance and be prepared to counter future cyber threats, sources added.
Amidst the expanding digitization of the financial sector, the Finance Ministry and RBI have been regularly alerting banks to this issue.
Last week, UCO Bank, a Kolkata-based public sector lender, reported an erroneous credit of Rs 820 crore to its account holders via the Immediate Payment Service (IMPS).
The bank discovered, due to technical issues in IMPS, that certain transactions initiated by account holders of other banks had resulted in credits to the account holders in UCO Bank without actual receipt of funds from these banks, between November 10th and 13th.
IMPS is a real-time interbank electronic funds transfer system that operates without any intervention.
The bank immediately froze the recipients’ accounts and has so far reclaimed Rs 649 crore out of the Rs 820 crore, which amounts to roughly 79% of the sum.
Whether this technical glitch was caused by human error or a hacking attempt is yet to be determined by the state-owned bank.
The bank, however, has reported the matter to law enforcement agencies for further action.