Kathmandu, April 14: The Nepal Rastra Bank (NRB), the central bank of Nepal, has pointed out the weaker cyber security system in Nepali banks.
The NRB’s Annual Report of Bank Supervision Department for 2022/23 has indicated two types of imminent threats that Nepali banks have been facing, i.e. Emplyoee/management related fraud, and Weak cyber security.
As part of employee/management related fraud, the NRB says, “With the increase in size and scope of banking business, risk of banking fraud has been increasing. The deceitful intentions of employee, management and even customer have led to number of banking fraud incidents. For instances, defrauding depositors amount deposited in the bank/vault cash, mismanagement of loans and assets (including NPAs), enticement from client, fake collateral, etc. At individual level, many of those involved in banking fraud are behind the bar and many are facing court cases. Similarly, at institutional level, bank has to face legal and reputational risk.
Likewise, under weak cyber security, the report says, “The use of digital banking has increased tremendously post covid pandemic. Mobile banking, internet banking, QR payment, digital wallets etc. are popular among digital financial service users. Digital banking exposes less financially literate customers to greater risks. The issue of the digital dividend and consumer privacy are also evolving as a major issue with the growth in the digital banking.
The report further said, “There have been possibility of cyber-attacks/frauds/crimes such as withdraw of money using expired ATM cards, hacking ATMs, hacking the banks by infiltrating the service providers (visa/ SCT/ MasterCard, etc) network system with a virus malware and blocking access to the bank’s information system, distributed denial of service attacks, phishing, server crash, spyware, new types of cyber-crimes, etc. in the digital banking services. Such incidents may result into financial and reputational risk.”
