Money
NRB’s payments system is ‘secure’
With the recent $101 million Bangladesh Bank heist alarming central banks everywhere, especially in developing countries, officials of Nepal Rastra Bank (NRB) have said its payments system is “secure”.Bibek Subedi
With the recent $101 million Bangladesh Bank heist alarming central banks everywhere, especially in developing countries, officials of Nepal Rastra Bank (NRB) have said its payments system is “secure”.
Using the SWIFT messaging network, anonymous hackers on February 4 sent payment instructions from the Bangladeshi central bank to the Federal Reserve Bank of New York to transfer of $1billion. The Federal Reserve executed one payment of $20 million to a bank in Sri Lanka and four payments of $81mm to a bank in Philippines. The incident created panic among the banking industry worldwide over the safety of the international payments system.
NRB has its funds deposited in various financial institutions worldwide and it also uses the SWIFT network for international interbank transactions. But the NRB officials claimed they have “very secure” system and it is almost impossible for hackers to execute payments at their will.
“Our workstation, which is used for international interbank transfers, is secure and isolated where admission of unauthorised person is strictly prohibited,” said an NRB official. “Employees of that workstation are not allowed to carry any electronic gadgets, WiFi-connected devices and disk drives, and USB ports of the computer used in the workstation are disabled.”
However, experts from the Nepali banking industry said NRB should consider the recent cyber heist as a “case study” and conduct a detailed IT audit of its entire electronic payments and settlement system.
National Banking Institute (NBI) CEO Sanjib Subba said periodic information technology (IT) audit and reconciliation is indispensable for any electronic payments system.
“Time and again, we have seen the central banks of developing countries being vulnerable to operation risk during electronic payments and settlements,” Subba said. “Since the volume of transfer is significant, the magnitude of risk is much greater in the case of central banks compared to commercial banks.”
Former NRB Deputy Governor Maha Prasad Adhikari said there is no limit of operation risk and the central bank is also adequately exposed to possible financial frauds during international interbank fund transfers. Experts said banks, including NRB, should be vigilant about the interbank payments system from the time the system is installed for the first time.
At a national conference on “Financial Fraud” organised by NBI last year, a former Indian Police Service trainer had said hackers could plan a heist from the time banks start the process of procuring software. “There are plenty of cases in which hackers have planted malwares in the software before they are purchased by financial institutions,” he had said.