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Business News/ Companies / News/  'Cyber Security for a safer financial system': RBI dept guv MK Jain recommends 6 strategies for banking sector

'Cyber Security for a safer financial system': RBI dept guv MK Jain recommends 6 strategies for banking sector

RBI deputy governor MK Jain has called for an international effort to tackle cyber risk, saying that as financial transactions move online, the reliance on IT infrastructure grows exponentially. He suggested six cybersecurity strategies to improve the global cybersecurity environment.

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RBI deputy governor MK Jain on Monday said, curbing cyber risk requires an international effort. The deputy governor believes that as financial transactions migrate to digital platforms, the reliance on information technology infrastructure grows exponentially. Thereby, he recommended six cybersecurity strategies that would help improve the global cybersecurity environment.

Jain was talking at an international event under India’s G-20 Presidency in Mumbai.

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According to Jain, cyber-attacks targeting banks not only jeopardize the stability of individual institutions but also have the potential to disrupt financial systems, making it imperative for nations to come together and address this pressing challenge.

Therefore, he said, "This event under India’s G-20 Presidency is important to complement efforts of various international bodies for addressing the issues of cyber security in the banking sector."

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MK whose tenure at RBI as deputy governor is scheduled to end on June 22, outlined six strategies that would help improve the global cybersecurity environment. These are:

- First, the global financial system’s interdependencies need to be better understood by mapping key operational and technological interconnections, including that of critical infrastructure. Better incorporation of cyber risk into financial stability analysis will improve the ability to understand and mitigate system-wide risk.

- Secondly, a minimum common framework for cybersecurity needs to be devised that outlines best practices and standards for financial institutions to follow. This can help ensure that all institutions are taking the necessary steps to protect themselves from cyber threats.

- Thirdly, to the extent feasible as per domestic laws, countries can share information and intelligence about cyber threats and attacks. This can help to identify emerging threats and vulnerabilities and enable financial institutions to take proactive measures to prevent attacks.

- Fourthly, countries can work together to develop and implement incident response plans. This can help to ensure that in the event of a cyber-attack, there is a coordinated and effective response that minimizes the impact on the financial sector.

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- Fifthly, cyber-attacks should become more expensive and riskier for the perpetrators through effective measures to confiscate proceeds of crime and prosecute criminals. Stepping up international efforts to prevent, disrupt and deter attackers would reduce the threat at its source.

- Finally, countries can collaborate on capacity building and training programs to ensure that financial institutions have the necessary skills and resources to manage cyber risks effectively. This can include training on cybersecurity best practices, incident response planning, and the use of advanced technologies to detect and prevent cyber-attacks.

In the case of India, he highlighted that the country is one of the few countries that protects users through the mandate of two-factor authentication for digital payment transactions.

He added, although India is now recognised as an innovative regulation, at the time when RBI introduced it about a decade back, there was a push-back and criticism. Similarly, recent measures such as better customer control on card usage, shorter Turn-Around-Times for transaction failures, tokenisation, etc. are all initiatives intended to protect the customer.

Further, in the payments space, Jain mentioned that eal Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) have been made 24x7. Further, RBI catalysed the setting up of appropriate institutions like the Institute for Development and Research in Banking Technology (IDRBT) in 1996 and the National Payment Corporation of India in 2008, which have been instrumental in pioneering various payment system technologies and solutions.

Also, for UPI, India’s instant payment system, launched in 2016, the RBI deputy governor said, "has witnessed remarkable growth in India with daily transactions averaging over 300 million in volume and 480 billion in value during May 2023."

Recently, India and Singapore tied up their UPI and Pay Now systems allowing for real-time cross-border money transfers between the two countries. To this, Jain believes indeed, there is immense potential for the use of UPI globally through partnership and collaboration with other countries.

Considering the global nature of cyber threats, efforts by governments, financial entities, and technological companies are insufficient to protect against them. Cyber threats transcend geographical boundaries, making it necessary for countries and financial institutions to work together to address them, as per Jain.

In his concluding remarks, he said, it is expected that the G20 forum would complement the efforts of various international bodies towards building an approach for helping financial sector through capacity development initiatives aimed at designing and implementing international standards and best practices as a priority.

Lastly, he added, "together, we can make the financial sector more secure and trustworthy."

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