RBI Sounds Alarm Over Rising Cyberattacks, Pushes Banks to Strengthen AI Defences:

India’s central bank, the Reserve Bank of India (RBI), has warned banks about a rise in cyberattacks targeting financial systems. The RBI has asked banks to show whether they are following existing cybersecurity rules and explain how prepared they are to deal with risks linked to artificial intelligence (AI), according to three people familiar with the matter.

The warning comes as banks across the world face growing cyber threats, with hackers increasingly using advanced AI tools to steal customer data and money. Regulators in countries such as the US and UK are also taking steps to address these risks.

In recent meetings, the RBI asked banks to check for security weaknesses in their Application Programming Interfaces (APIs). These are software links that allow banks to connect with fintech companies and non-bank lenders. Cybercriminals are increasingly targeting smaller lenders and third-party service providers, as they may have weaker security systems.

Although the RBI has already issued cybersecurity guidelines, their implementation remains weak at some banks, a consultant working with a major bank said. The regulator is now pushing banks to ensure that these rules are properly followed.

Recent Cyberattacks Raise Concern

India has witnessed a rise in cyber incidents in recent weeks. At State Bank of India (SBI), the country's largest lender, data belonging to around 3,900 customers was leaked. The bank said last week that it was investigating the incident and had not yet identified the security weakness responsible.

In another incident, two Mumbai-based non-bank lenders reportedly lost around $2 million through more than 700 unauthorised instant transfers on October 8 and 9. The money was transferred from accounts held with ICICI Bank, according to a police complaint reviewed by Reuters.

The complaint said hackers had compromised the API link used by the lenders to send loan disbursal instructions to ICICI Bank. ICICI Bank did not immediately respond to requests for comment.

Meanwhile, India's cybersecurity agency CERT-In warned on October 9 that hackers were stealing banks' API login details to transfer money out of lenders' systems. The agency also flagged the possible use of AI-powered tools in these attacks.