Mumbai: India’s banks are in a financial tailspin after a massive cyber attack on their networks.
The country’s biggest lender, ICICI, on Wednesday reported a loss of $7.8 billion, while state-run lender HDFC lost $3.9 billion, or 8.4% of its value.
While the scale of the losses will undoubtedly be felt by the public, the banks are also facing mounting pressure from the government to make good on the promise of reforms announced last year.
The RBI has been pressuring banks to speed up repayment of unsecured loans.
The government wants to cut out interest rates, which are among the world’s lowest.
The banks, which have been under the watch of the Reserve Bank of India (RBI) for more than a decade, were not expecting a cyber attack, said Sanket Joshi, an analyst with ICICIs India.
But they had not been expecting to be hit by a cyber event, he said.
“When they got hit, they felt like they were in a black hole.
It was the most extreme experience of a cyber emergency we have seen in the history of the banking sector,” Joshi said.
The impact of the attack was felt on all banks, especially HDFC, which reported an 18.5% loss in the third quarter.
ICICICI lost $1.7 billion in the same period.
RBI Governor Raghuram Rajan has said he wants banks to make better use of data, and that the country’s banking sector should be more transparent.
But banks are still struggling to pay back loans.
The Indian government has announced a series of measures aimed at helping banks make repayments faster.
But the banks’ inability to repay loans has been a sticking point.
The Indian banking sector has been the target of cyber attacks before.
In 2014, the country was hit by ransomware, a virus that encrypts data and leaves behind a message in a language unknown to its users.
The virus hit more than 2,400 banks and other financial institutions, but the damage was so severe that the government ordered banks to suspend some transactions for months.
Last year, another ransomware attack forced Indian banks to halt payments for months as it forced them to turn over data on customers.
In May, the government announced it was banning all payments for several months in an attempt to stop cyber attacks.
Last year’s cyber attacks also affected other Indian industries, including food, construction, power and transportation.
In response, the Reserve Board of India, which is responsible for overseeing banks, announced that it was suspending payments for more transactions from banks that have been hit by cyber attacks and froze all deposits in the country.
But the RBI did not ban all banks from making payments for up to two weeks, the regulator said.
The bank has also started a fund to cover the losses incurred from the cyber attack.
In April, the RBI also suspended payments for all banks that had not completed a repayment plan and said it would freeze bank deposits and withdrawals for six months.
The regulator also banned all online banking for seven months.