RBI Urges Banks to Strengthen Cybersecurity Amid Alarming Rise in Cyber Fraud Cases
The Reserve Bank of India (RBI) Governor Sanjay Malhotra has urged the banks to upgrade their digital security measures due to increasing cyber fraud cases. Malhotra stressed the need to have preventive measures against cyber threats.
RBI Deputy Governors Rajeshwar Rao, T Rabi Sankar, and Swaminathan Janakiraman also attended a meeting on 27 January 2025, and a major part of the discussion was centred around the risks in the financial system. The RBI pointed out that there was a need to enhance financial institutions’ cybersecurity, digital literacy, and customer transactions. The governor urged the RBI and banks to improve their cooperation to increase financial stability.
Strengthening Oversight on Third-Party Service Providers
Malhotra stressed that the banks should exercise more control over the third-party vendors to reduce IT and cyber risk. He pointed out that most financial institutions source their digital banking products from third-party providers hence the need to evaluate the security of such solutions.
The RBI’s concerns are similar to the recent cases where cybercriminals took advantage of weak points in the financial sector. According to a report by the central bank, the instances of cyber fraud in India rose by 334% year on year in the year 2023-24 and the amount lost was more than INR 177 crore.
Government and Private Sector Efforts to Tackle Cyber Fraud
There are some examples of the Indian government’s response to cyber fraud like ‘Citizen Financial Cyber Fraud Reporting and Management System’ which has saved over INR 2,400 crore. Besides, fintech companies such as Razorpay have collaborated with the Ministry of Home Affairs and the Indian Cyber Crime Coordination Centre to promote digital safety.
With more and more transactions moving online, the RBI has called for increased spending on technology by banks to protect consumers and build confidence in the digital financial system.
