Tuesday, October 25, 2016

Debit card data breach:Threat to Digital India?



In past few years, India’s banking system has undergone enormous changes. Banks have embraced the benefits of digital revolution and are harnessing it to improve service delivery. This has benefited not just consumer and banks but even the government has put its hopes on spread of digital banking to realize the dream of Digital India.
                Economic survey highlighted importance of JAM trinity (Jan Dhan, Aadhaar, Mobile) for better targeting of subsidies and thereby improve governance. The Jan Dhan component  is moving swiftly with the growing number of bank accounts. Aadhaar is also fast becoming ubiquitous in India. Mobile revolution has put mobile in hands of common man. However JAM benefit can be harnessed only when mobile banking is utilised by public. This will enable payments and transfers via mobile .It will reduce time and opportunity cost of daily wage earners. For others, it makes transactions convenient and hassle free.
                Mobile banking has spread fast thanks to innovations and supportive regulations. Today there are numerous companies coming out with apps to enable payments and transfers of various kinds. Reserve Bank of India has given in principle approval for setting up of payment banks. This will further penetrate use of digital medium for transactions. All these paint a rosy picture. Some analysts were so excited by these developments that they started dreaming of a cashless Indian economy.
                The dream shattered with revelation of a large scale data theft from several Indians banks in 2016. The incident revealed the loopholes in India’s cyber security regime. Even as more and more Indians are logging on to the cyber world. India has been slow in coming up with security measures to protect its citizens and property. We have seen cyber attacks on various institutions of government. But the recent incident in financial domain is a cause for grave concern.
                India’s growth has been propelled by IT boom. Much of activity in future would be dependent on cyber world. Hence it is imperative that we buck up and strengthen cyber security. India is blessed with surplus engineers by fate or design. Indian government should tap these enormous pool of talent to create a cyber army not just to defend but also to unleash cyber attacks. Deterrence is best form of defence.
                The recent attack reveals the threat to financial sector. Financial sector regulators and participants need to heighten their vigil in cyber world. Digital banking which is still in nascent stage in India can grow only with trust of people. The recent incident has created a trust deficit among public. There has been a decline in online and debit/credit card transactions and a increased demand for currency. This is a setback to digital banking. Banks need to act fast to secure their networks and assure their customers of the safety of their systems. Regulators need to give equal priority to cyber audit as other audits. RBI’s move to setup a IT division is a step in right direction.
                Cyber criminals are evolving new and advanced methods to perpetrate their crimes. To keep these in check, we need to invest in cyber surveillance and research. Our investigative agencies need to be equipped with skills to undertake investigations in cyber world. Laws need to be strengthened in cyber world to instill fear among those who have evil designs in their mind.

                The economic survey called for spread of JAM to alleviate people’s problems. Before spreading JAM it is important to protect it from attacks of ants, only then can we really enjoy the taste of JAM.

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