AP Mahesh Co-operative Urban Bank Limited has been slapped with a penalty of ₹65 lakh by the Reserve Bank of India for violating various rules that led to a hacker gaining access to bank systems causing a loss of ₹12.48 crore.
As per RBI’s release dated June 19, the monetary penalty on AP Mahesh Co-operative Urban Bank Limited was for non-compliance with directions on ‘Basic Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs), ‘Comprehensive Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs) - A Graded Approach’ and ‘Internet Banking Facility for Customers of Cooperative Banks’. The penalty was as per provisions under the Banking Regulation Act, 1949.
The Hyderabad city police disclosing the development on Saturday said it was an unprecedent move by the apex bank.
“Hyderabad city police commissioner C.V. Anand, corresponded with the RBI Governor, highlighting the critical lapses and requesting for the suspension of the bank’s license to operate. The current legal framework did not allow for criminal negligence charges against the bank management. Nevertheless, the city police pursued the matter which resulted in the RBI imposing a monetary penalty of ₹65 lakh on AP Mahesh Co-operative Bank Ltd,” a release said.
On January 24 last year, the police said, a sophisticated hacker breached the bank’s systems and siphoned off ₹12.48 crore. The act was carried out through a series of phishing emails that were cleverly disguised and sent to bank employees. Upon opening such malicious e-mails, the employees’ systems were compromised, providing the fraudsters full access to the bank’s network.
The police had registered the crime under provisions of the Information Technology Act and provisions of the IPC.
