FinMin asks State Owned Banks to review Digital Operations

The Finance Ministry (FM) has asked state-owned banks to analyse their digital systems and methods given the latest UCO Bank issue.

According to trusted sources, banks have been encouraged to assess their cyber security durability and strengthen it.

Sources said, banks should maintain vigilance and be prepared for future cyber crimes.

In light of the sector’s growing digitisation, the finance ministry and the RBI have been regularly sensitising banks on this topic.

UCO Bank, located in Calcutta, reported an erroneous credit of Rs. 820 crore to account holders via Immediate Payment Service (IMPS) last week.

During the week of November 10-13, the bank observed that, due to technical issues with IMPS, certain transactions begun by holders of other banks resulted in credit to UCO Bank account holders without actual receipt of money from these banks.

IMPS is an interbank electronic funds transfer system that operates in real time with no interaction.

The bank restricted the receivers’ accounts and was able to recover Rs. 649 crore out of Rs. 820 crore, or almost 79 % of the total.

The state-owned bank has yet to determine whether the technical collapse was caused by human error or a hacking attempt.

However, the bank has reported the incident to law enforcement agencies for further investigation.

UCO Bank reported a 20 % decrease in net profit to Rs. 402 crore for the quarter ending September 2023, compared to Rs. 505 crore in the same quarter last year.