More Online Transactions Pose Cyber-Challenge to Indian Banks

© REUTERS / Danish SiddiquiA customer deposits 1000 and 500 Indian rupee banknotes in a cash deposit machine at bank in Mumbai, India, November 8, 2016
A customer deposits 1000 and 500 Indian rupee banknotes in a cash deposit machine at bank in Mumbai, India, November 8, 2016 - Sputnik International
The Modi bombshell of demonetization struck when Indian banks were still updating the security architecture of their online operations. They now face the challenge of fending off cyber attacks as more people take to e-banking

India's Prime Minister Narendra Modi reads a joint statement with his British counterpart Theresa May (unseen) at Hyderabad House in New Delhi, India, November 7, 2016 - Sputnik International
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New Delhi (Sputnik) — India’s banking sector is walking on a double-edged sword of rising digital transactions accompanied by a security risk.
Prime Minister Narendra Modi’s decision to ban the high-value denomination currency notes has given a major fillip to the digital payment ecosystem within India.

Paytm, a digital wallet platform, has registered a 435 per cent rise in its traffic and a 1,000 percent jump in online recharges in the two days following a ban on high value currency bills. Another mobile wallet Ola Money has reported a 1,500 per cent increase in recharges across the 102 cities of its operation since the day.

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But the rise comes close on the heels of one of the biggest cybersecurity breach reported by major Indian banks that struck both governments as well as private. As a result nearly 3.2 million debit cards were compromised. In fact, the extent of breach still remains unknown and information has come out is in bits and pieces. An Economic Times report claimed that Kaspersky, the well-known Moscow-based cyber security firm, shared the information with Axis Bank, India’s third largest private sector bank. Kasperskly had earlier discovered the Bangladesh Bank heist as well.

Despite India’s prowess in information technology, a major worry is that most banks and financial institutions have until recently underestimated cyber-security as a threat, says an industry expert.

“We even lack functional teams and strategic processes to respond in the event of cyber-security breaches. The general lack of awareness among the people compounds the problem,” says a top information security official with a leading payments security specialists firm.

Data and information security is particularly weak. Many firms take months before undertaking the required security upgrades.

“We have some of the least secure financial institutions across the world, and still use 15 year old Windows XP, which does not even get security patches anymore. The guidelines from the government on encryption etc. are also not clear,” he adds.

There is a need to upgrade cyber-security infrastructure as data from the National Crime Record Bureau (NCRB) shows a 69 per cent increase in cyber-crimes in recent years.

Phishing in particular has been a growing concern – over 11 million incidents were handled in the last three years. The actual numbers may be much higher. India lacks a consolidated crime data or a centralized directory recording crime numbers as law and order comes under the purview of states and union territory

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