Cyber Crime
RBI Cracks Down on AP Mahesh Bank: Rs 65 Lakh Penalty for Cybersecurity Negligence
In a groundbreaking move, the Reserve Bank of India (RBI) has levied a penalty of Rs 65 lakh on AP Mahesh Cooperative Urban Bank for its failure to comply with the Cyber Security Framework for Primary (Urban) Cooperative Banks.
Following a comprehensive cyber audit conducted by the RBI and an investigation carried out by the Hyderabad police, it was discovered that the bank had significant vulnerabilities that allowed hackers to breach its systems and siphon off an amount totaling Rs 12.48 crore.
The audacious online bank heist occurred on January 24, 2022, when AP Mahesh Bank fell victim to a cyber theft. A hacker infiltrated the bank’s systems and managed to abscond with a substantial sum of Rs 12.48 crore.
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The subsequent police investigation revealed that the perpetrators initiated the attack by sending a series of phishing emails to the bank’s staff. These emails, cleverly disguised and laden with malware, successfully deceived unsuspecting employees into unwittingly granting cyber criminals full access to the bank’s systems.
Efforts to bring the perpetrators to justice were not in vain, as the state cybercrime police managed to apprehend six individuals, including two Nigerian nationals, in connection with the Rs 12.48 crore heist.
Upon closer examination of the incident, the police and RBI investigations unearthed startling revelations regarding the bank’s alleged negligence in implementing adequate cybersecurity measures. The lapses in security prompted Hyderabad Police Commissioner CV Anand to address the RBI governor, outlining the critical security deficiencies and urging the suspension of the bank’s operating license.
“The existing legal framework does not currently allow for charges of criminal negligence to be levied against bank management. Nevertheless, the city police pursued the matter with relevant authorities, ultimately resulting in the RBI imposing a monetary penalty of Rs 65 lakh on Mahesh Bank,” stated the police commissioner.
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According to the police, the bank had failed to establish the required cybersecurity infrastructure as stipulated by the RBI guidelines. This infrastructure includes crucial security measures such as anti-phishing applications, intrusion prevention and detection systems, and real-time threat defense and management systems.
This incident serves as a stark reminder to financial institutions about the ever-increasing threat posed by cybercriminals. The RBI’s firm action in penalizing AP Mahesh Cooperative Urban Bank underscores the importance of robust cybersecurity measures and highlights the need for constant vigilance in safeguarding sensitive customer information and financial assets.
AP Mahesh Cooperative Urban Bank must now take swift and comprehensive action to rectify the security lapses and fortify its cybersecurity posture. The bank’s management and staff must prioritize the implementation of rigorous security protocols and allocate adequate resources to prevent future cyber breaches, ultimately ensuring the safety and trust of their customers’ financial transactions.
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