Ransomware Attack Shuts Down Payment Systems of 300 Small Banks, Customers Face Inconvenience as ATMs and UPI Transactions Cease

Winning Bizness Desk

Mumbai. A ransomware attack has disrupted banking operations for approximately 300 small banks and financial institutions nationwide. The cyberattack targeted C-Edge Technologies, a technology service provider that supports banking systems for these institutions. As a result, customers of cooperative banks and rural regional banks reliant on C-Edge Technologies, a joint venture between SBI and TCS, are unable to withdraw cash from ATMs or complete transactions via UPI. Neither the Reserve Bank of India (RBI) nor C-Edge Technologies has issued a statement regarding the attack, and no financial losses have been reported thus far.

National Payment Corporation of India's Response

The National Payment Corporation of India (NPCI), which oversees the payment system, announced the incident on social media platform X on Wednesday night. NPCI stated that "software company C-Edge Technologies has been attacked with ransomware, which has affected some of its systems." In response, C-Edge has been temporarily isolated from NPCI's retail payment system while restoration efforts are underway. NPCI is conducting a security review of the affected banks' payment systems, which remain inaccessible to customers during this quarantine period.

Payment System Issues Persist for Several Days

According to a report from a news agency, Dilip Sanghani, Chairman of the National Cooperative Union of India, confirmed that around 300 banks, including 17 district cooperative banks in Gujarat, have experienced payment issues for the past two to three days. Sanghani noted that these problems began on July 29, with software company officials attributing the disruption to a technical glitch. Despite these issues, other banking services are reportedly functioning normally.

The affected banks have been isolated from the national payment network to prevent the spread of the cyberattack, impacting only 0.5% of the country's payment system. An official stated that ransomware was detected in C-Edge's system, and a third-party audit was conducted following its removal. The system is expected to be operational by Thursday morning or afternoon if all goes according to plan. There are approximately 1,500 cooperative and regional banks in India, primarily operating outside major cities.

Understanding Ransomware Attacks

Ransomware is a type of malware that infiltrates computer systems, encrypting all files and demanding a ransom for their return. The term can be likened to digital kidnapping, where a hacker seizes control of data and demands payment for its release. The world's first known ransomware attack occurred in 1989, executed by AIDS researcher Joseph Popp, who distributed malware-laden floppy disks under the guise of AIDS risk analysis. This incident, known as the AIDS Trojan, demanded a ransom of $189 for data retrieval.