The Indian banking sector is in a difficult position, as a series of reports reveal that some banks are still not able to adequately protect customer information.
The banks in the top 10 globally are now subject to the same stringent anti-money laundering guidelines as banks in most other countries, such as the US, UK, France, Italy and Canada, and have been mandated to implement an anti-banking exercise.
The Government of India has also launched a new system of “security assessments” to help banks tackle the issue of cross-border financial crimes.
The new system will see banks assess the risk of an attack from the US and other countries on their systems and then identify the specific locations where such attacks might occur.
“This exercise is meant to provide a baseline for the banks on the security of their systems, and is also aimed at assisting them in addressing their own risk,” a finance ministry official told The Hindu on the condition of anonymity.
“We are working on this exercise now.”
It has been a long time since the Indian banking industry has seen such a stringent exercise, and the new guidelines will take a significant step in helping banks to improve their data protection.
The banks have been tasked with developing a “risk assessment” for the purpose of the exercise, which will also identify the relevant financial institutions.
The guidelines were developed by the Financial Services Council of India (FSCI), an independent regulator that advises and regulates the financial services sector.
“The government has taken a number of proactive measures to improve the security posture of banks,” the finance ministry spokesperson told The Indian Express.
“These include the launch of a comprehensive risk assessment exercise by FSCI, as well as a detailed security audit by the Central Vigilance Commission.
The government has also sought to increase the use of digital authentication and encryption in transactions and financial transactions, including the creation of an inter-ministerial task force on financial security.”
It is not clear how banks are being prepared for this new exercise.
It is not yet clear how much the exercise will cost and how it will be implemented,” he added.