Cosmos Bank fraud: NPCI blames bank’s IT system for Rs 94 crore fraud

Mumbai: The National Payments Corporation of India on Wednesday held the Cosmos Cooperative Bank’s “own IT environment” responsible for the unprecedented cyber loot which left the Pune-based bank poorer by Rs 94.42 crore.

In a statement here, the NPCI’s Head Risk Management, Bharat Panchal, said: “The NPCI’s systems are fully secure and this particular issue has occurred within the (Cosmos Bank’s) own IT environment. This has happened due to malware-based attack on the bank’s IT system which has caused a fraud. Under the attack, maximum transactions have been reported from outside India.”

He reiterated that the systems of NCPI – the umbrella organisation for operating retail payments and settlement systems in India – “were absolutely secure and it was continuously monitoring the situation arising out of the Cosmos Bank episode”. The Indian banking industry went in shudders on Tuesday after the Cosmos Bank admitted that it had fallen victim to an international group of hackers who siphoned off a total of Rs 94.24 crore in two cyber attacks on August 11 and August 13.In the first cyber hit, the bank lost Rs 80.50 crore through multiple ATM swipes in 28 countries.

In the second malware assault, the hackers gobbled up Rs 13.92 crore by initiating SWIFT transfers. Cosmos Bank Chairman Milind A. Kale said that after the malware attack on the critical communication system between various payment gateways was hacked, the hackers’ gangs were informed simultaneously in 28 countries and they immediately started the withdrawals, in many cases small amounts of around $100, to avoid rousing suspicions.

He said normally, the Core Banking System (CBS) receives debit card payment requests via its ‘Switching System’. But during the malware attack, a proxy switch was created and all the fraudulent payment approvals were passed through the proxy switching system. Kale said the bank’s own servers and other systems were inspected annually by the Reserve Bank of India Audit and System Audit and the bank was ensuring all the measures for data security and this security system was fully operational.Banking experts and industry players fear this could be a ‘pilot run’ unless the authorities take it seriously.

Meanwhile, pending investigations, the country’s second oldest and second largest cooperative bank (in terms of deposits and advances) has now shut all its ATMs across the country for two days till Thursday to prevent any further incidents. The consolation was the Kale’s assurance that none of the bank’s 20 lakh customer accounts across 140 branches in the country have been affected, nor would they bear any loss.

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