Fallout from UCO Bank: Government advises PSBs to boost digital security

In light of the recent UCO Bank incident, the finance ministry has requested that state-owned banks review the systems and procedures pertaining to their digital operations. Sources claim that the banks have been counselled to assess and strengthen their cyber security defenses.

According to sources, banks should maintain a close eye on things and be prepared for any future cyber attacks.

As the financial sector becomes more and more digitalized, the finance ministry and RBI have been regularly educating banks on this topic. UCO Bank, a public sector lender with headquarters in Kolkata, notified its account holders last week of an incorrect credit of Rs. 820 crore made through the Immediate Payment Service (IMPS).

The bank noticed that from November 10 to 13, certain transactions started by customers of other banks had resulted in credit to UCO Bank account holders without these customers actually receiving money from these banks because of technical problems with IMPS.

The instantaneous interbank electronic fund transfer system, or IMPS, operates without human intervention. About 79% of the total, or Rs 649 crore, was recovered by the bank after blocking the recipients’ accounts.

The state-owned bank has not yet disclosed if a hacking attempt or human error caused this technical malfunction.