RBI record fine: Bank fined 65 lakhs for lack of cyber security

India's central banking institution, the Reserve Bank of India (RBI), has fined Hyderabad-based AP Mahesh urban cooperative bank Rs 65 lakh. The disciplinary action was taken following a cybersecurity breach which saw hackers infiltrate the bank's systems via phishing emails, stealing Rs 12.48 crore in January 2022. The decision was taken after a Rigorous cybersecurity audit by RBI and an investigation by Hyderabad Police, which revealed serious deficiencies in the bank's cybersecurity.

The importance of cybersecurity compliance

The RBI has highlighted the importance for all banks to comply with cyber security practices to prevent loss of public money and crucial data. The action taken against AP Mahesh Co-operative Bank marks the first time such a fine has been applied. This information was provided by the Hyderabad Police, who expressed concern over the loss of public money and highlighted the need for better compliance with cyber security regulations by banks.

Cyber attack details and investigation

AP Mahesh Co-operative bank reported the cyber fraud incident, which was carried out through a series of deceptively disguised phishing emails sent to bank employees. Opening these malicious emails compromised the employees' systems, giving the scammers unlimited access to the bank's network. During the investigation, several perpetrators, including Nigerian nationals, were arrested by the police.

Bank negligence and future actions

The investigation revealed gross negligence on the part of the bank, evidenced by its failure to implement mandatory cybersecurity measures, such as an anti-phishing application, intrusion detection and prevention systems, and threat management and defense systems in real time, as established by the RBI. These components are critical to protecting the cyber landscape, and their lack within the bank's cyber security infrastructure has been critical. The Hyderabad Police Commissioner, CV Anand, has corresponded with the Governor of RBI, highlighting the serious deficiencies and requesting the suspension of the bank's operating license. Although the current legal framework does not allow the bank's management to be prosecuted for criminal negligence, the Hyderabad City Police proceeded with the action, which resulted in the RBI fine of 65 lakh rupees imposed on AP Mahesh Co -operative Bank.