Govt to meet RBI, NPCI & TRAI after UCO Bank incident: What caused 'Rs 820 crore technical glitch' at the bank

The Finance ministry has taken a serious notice of the recent major issue at UCO Bank and the rising cases of bank frauds in the country. The ministry and the parliamentary panel on ICT have decided to look into and tackle the matter. Financial services secretary Vivek Joshi will hold key consultations on the matter next week.

Meetings will include officials from the Reserve Bank of India (RBI), Trai, telecom department and the National Payments Corporation of India (NPCI), among others.

The parliamentary panel has already held consultations with the finance ministry and Punjab National Bank (PNB) MD. Reported fraud cases reached nearly 13,500 in the last year, compared to 9,100 in the previous fiscal year, marking an increase of almost 50%. Analysts believe that these figures may not fully reflect the situation, as many consumers do not file complaints.

The immediate trigger for the meeting appears to be the UCO bank incident.

The government and the Reserve Bank of India (RBI) are investigating lapses at UCO Bank. Earlier this month, Kolkata-based public sector lender UCO Bank reported erroneous credit of Rs 820 crore to account holders of the bank via Immediate Payment Service (IMPS). According to the bank, during November 10-13 due to technical issues in IMPS, certain transaction(s) initiated by holders of other banks have resulted in credit to the account holders in UCO Bank without actual receipt of money from these banks. IMPS is a real-time interbank electronic funds transfer system without any intervention.
The bank blocked the recipients' accounts and has been able to recover Rs 649 crore out of Rs 820 crore.

Was UCO Bank incident hacking attack

The state-owned bank is yet to clarify whether this technical glitch was due to human error or a hacking attempt. However, the bank has reported the matter to the law enforcement agencies for necessary action.