GROUP –

10

CYBER - CRIME: A
Growing Threat to Banking Sector
INTRODUCTION
Banking Sector in most parts of the world was simple and reliable
but since the advent of technology in the Indian banking sector,
although there has been a positive shift, the banking frauds have
also shifted likewise. Cyber-crime are frequent these days and
financial sectors are majorly targeted by hackers and criminals.
Financial organization rely on digital networks for their business
operations which increases the risk of becoming a victim of
cybercrime. Banks in order to enhance customer base introduce
platforms through which transactions can be done online without
much efforts. Cyber-crimes are directly proportional to less
security measures. One of the ways to mitigate the problem of
cybercrimes in banking sector is to identify the factors related to
banks that are generally target of such cyber-attacks and why
some banks have never faced such a situation. Some of the key
factors which reflect the pattern why some banks are targeted
more than others include their size (market share), no. of clients,
their authentication system is weak, their money transfer policies
are not safe and the country in which these banks are located is
also an important pre-requisite for the cyber criminals. Studies
conducted recently conclude that some of the malware used to
attack these banks are becoming more specific however, more
such researches will have to be conducted to conclude if indeed
cyber criminals are selecting their target specific tools or not.

OBJECTIVES
1. To understand why banks are targeted most by criminals
and facing huge amount of security breach.
2. To study the various types of cybercrimes and its
implications.
3. To study the effects of Cyber Threats on customer’s
behaviour in e-Banking services.
4. To analyse various case studies relating to cybercrime in the
Indian banking sector during 2015-2019.
5. To study RBI’s prevention guidelines that helped banks to
combat cybercrime.

NEED OF THE STUDY

The need of this study is to spread awareness among the users of
internet banking and analyse the loopholes existing in the Indian
Banking Sector in order to curb the fraudulent activities. To aid
financial organizations understand the sensitivity of cybercrime
activities so that they provide safe and secure environment while
dealing in online banking.

LITREATURE REVIEW
1. Esther Ramdinmwaii , Seema Ghisingh, Usha Mary Sharma,
2014 “A study on the Cyber-Crime and Cyber Criminals : A
Global Problem”
2. Mrs Vinaya Chaturvedi 2015, “Cyber Crime: Technological
blight in digital banking in India.”
3. As per OECD report 2007, “Cyber Criminals: 5 types.”
 4. A.R. Raghavan and Latha Parthiban 2014 “The effect of
Cyber Crime on a bank’s finance.”
5. Mrs Shanti Kiran 2018, “Cyber Crime in banking industry
and its impacts.”
6. Dr Manisha M.More, Meenakshi P. Jadhav, Dr K.M.Nalawade
2016, “Online banking and cyber-attacks: The current
scenario.”
7. Florencio D. and Herley 2010, “Phishing and money mules.”
8. Monalisa Hati 2016, “Cyber Crime: A threat to the nation and
its awareness.”

There are number of frauds or cyber-crimes witnessed in the

banking sector like ATM frauds, Cyber money laundering and
credit card frauds. In some cases the cyber criminals uses the
banks credentials like PIN, Password, Certificates etc. to access
accounts and steal merger amount of money from banks, while in
other cases it’s just the transfer of funds into mule accounts.
Sometimes it’s the intention of criminals to just harm the image of
the banks and block bank servers so that clients couldn’t access.
As a lot of vulnerabilities exist in the defence system of the
banking sector, thus there is a need to investigate the ways to
increase awareness about the measures that can be undertaken to
combat cyber-crimes in this sector.
Why are banks such a lucrative target for cyber-crime? Cyber
criminals go where the money is and banks have more money
than organizations. While there are numerous threats aimed at
bank systems and their customers, one of the biggest threats and
often one of the hardest to detect is that of malicious, careless and
compromise users. These employees, contractors and partners
are already inside the bank’s secure perimeter and have
legitimate access to its sensitive data and IT systems. In order to
understand the fraud system in the banking sector we will have to
understand and describe the attackers and defenders in this
environment.
The literature review indicates that several researches have
investigated cyber-crimes by considering several factors, but in
order to understand the fraud system in banking industries, we
have to understand attackers and defenders. These frauds happen
because hackers want to be rich in one night without any efforts.
The other reason is hackers want to use this money for antisocial
and terrorist activities. Banks are required to put their regular
efforts to combat these crimes.

RESEARCH METHODOLOGY
This study is based on secondary data. The study will be
descriptive and will be conducted on the basis of collecting data
from various sources like material books, journals and research
papers, articles etc. To fulfill the first objective of the category of
cyber-crimes is analyzed by reviewing various literature. To
review the tricks and techniques used by cyber criminals to hack
the banking systems and to do the frauds various case studies and
various news channels are being referred. The status of cyber
crimes in India is gathered from annual reports of National Crime
Record Bureau (NCRB).

DATA ANALYSIS
Cybercrime are increasing globally and India too has been
witnessing a sharp increase in cybercrimes related cases
in the recent years. The sector prone to cyber-attacks are:
FIGURE:1- Sectoral analysis of Cyber attack
 % of cyber att acks
70

60

50

40

30

20

10

0
industrial sector government infrastructure banking sector

% of cyber attacks

SOURCE: Cyber crime report 2016

The cases related to cybercrime have grown due to upsurge in mobile devices
with internet connectivity. Activities like internet banking, online shopping,
paying utility bills, give rise to confidential information to the criminals.Among
the different motives for committing a cybercrime, monetary profit remains
the consistent reason for the past numerous years.
FIGURE :2 - Cybercrime by motives

cases
others
Emotional motive
Extortion
Prank/satisfaction of gaining control
Fraud /Illegal gain
Sexual exploitation
political motives
inciting hate crime against community
Inciting hate crime against country
Disrupt public services
sale/ Purchase of illegal drugs
For developing own business
For spreading piracy
Greed
Blackmailing
Personal revenge
0 500 1000 1500 2000 2500 3000 3500 4000 4500
 FIGURE:4- CYBERCRIMES REPORTED AND AMOUNT INVOVLED( in lakhs)
A) SCHEDULED COMMERCIAL BANKS B) PUBLIC SECTOR BANKS
C )PRIVATE SECTOR BANKS

total cases reported amount involved

21966

total cases reported amount involved

823.63
672.48
15018

9588
7233.31

370.12
8322
5266.95
4048.94

3672.19

214
105.81

156

128
97

2010 2011 2012 2013

2010 2011 2012 2013

total cases reported

amount involved
16100

10129

6527
4232.61

4144
2506.47
2225.94

1670.72

2010 2011 2012 2013

The data have been analysed to reveal comparative status of cybercrime cases in terms of number
and amount involved. The study focuses on two kinds of comparison:

1. Intra Sector (banks within same sectors)

2. Inter Banking (between sectors)

TABLE:1- FRAUDS RELATED TO ATM, ONLINE BANKING, ONE TIME PASSWORD(OTP) IN VARIOUS
STATES OF INDIA (2016)

ATM ONLINE BANKING OTP FRAUDS

 FRAUDS

MAHARASHTRA 598 MAHARASHTRA 345 MADH 122

YA
PRADE
SH
BIHAR 324 GUJARAT 42 ANDHR 62
A
PRADE
SH

ODISHA 168 ODISHA 116 TELAN 61

GANA
UTTAR 120 UTTAR 69 UTTAR 18
PRADESH PRADESH PRADE
SH

TELANGANA 56 TELANGANA 111 RAJAST 16

HAN
INDIA TOTAL 1543 INDIA TOTAL 804 INDIA 334
TOTAL

ATM frauds are at alarming rate as compared to the online frauds and otp
frauds .Due to increasing number of ATM frauds in Maharashtra, it is
considered as the ATM fraud capital of India. People lost around 4.8 crore to
bank frauds. To reduce the occurrence of unauthorized transactions happening
at ATMS, India’s largest lender; SBI has introduced one-time password for
every cash withdrawal above 10000 between 8am to 8pm from 1 st January.
The otp frauds were initially of small amounts of 5000- 10000, but later it went
ranging from 1 to 5 lakhs. One of reasons for Rajasthan having a least number
of cyberfrauds is due to the slow pace in IT development.