Finance Ministry Urges State-Owned Banks To Bolster Cybersecurity Post UCO Bank Incident

The finance ministry has advised state-owned banks to conduct a thorough review of their digital operations' systems and processes following the recent incident involving UCO Bank. The directive aims to ensure that banks assess and strengthen their cybersecurity measures to withstand potential cyber threats effectively. 

Both the finance ministry and the Reserve Bank of India (RBI) have consistently emphasised the importance of robust cybersecurity measures, especially given the increasing digitisation in the banking sector. This advisory follows UCO Bank's report of an erroneous credit of Rs 820 crore to account holders due to technical issues in the Immediate Payment Service (IMPS). The finance ministry underscores the necessity for banks to maintain a tight vigil and be prepared for potential future cyber threats.

Last week, UCO Bank, based in Kolkata, reported an incorrect credit of Rs 820 crore to its account holders through IMPS. The bank identified technical issues in IMPS during 10-13 November, resulting in certain transactions initiated by holders of other banks being credited to UCO Bank account holders without actual receipt of money. IMPS is a real-time interbank electronic funds transfer system that operates without any intervention. The bank took prompt action by blocking the recipients' accounts and has successfully recovered Rs 649 crore out of the total amount. 

It remains unclear whether the technical glitch was caused by human error or a hacking attempt. The matter has been reported to law enforcement agencies for necessary action. Despite this incident, UCO Bank reported a 20 per cent decline in net profit to Rs 402 crore for the quarter ended September 2023 compared to Rs 505 crore in the corresponding quarter a year ago.