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Indian Banks Closed by Technological Incompetence

Over the last few weeks there have been an alarming increase in the number of disruptions in the Indian Banks due to failure of technology.

Most of the Indian Banks are now on a “Core-Banking Software Platform” and the branches are totally dependent on the Central server and also the connectivity.

It was observed that recently Indian Overseas Bank was literally closed for four days with further disruptions on subsequent days . This was not due to any cyber terrorism but because the Bank  tried to migrate the server to a new place and the system had compatibility issues. State Bank of India and State Bank of Mysore also are reported to have had two to three days disruptions in Bangalore recently for more or less similar reasons. Now for the last few days Corporation Bank is experiencing similar down time.

During these forced shut downs, customers have been put to enormous inconvenience and loss which should normally reflect in claim of damages from these banks.

It is not clear how RBI is addressing this issue since some of the problems seem to arise because of the inadequate Business Continuity plan in Banks.  RBI should also  conduct a survey of how many branch-minutes of Banking is lost due to failure of technology in Indian Banks in an year and what measures are taken by each of the Banks in this regard.

RBI should also make an assessment  on whether Banks can sustain their viability if the Customers of the Bank launch Consumer disputes claiming damages.

Banks should realize that providing uninterrupted Banking service is vital to the smooth functioning of the economy and any negligence on their part in meeting this obligation would be considered as “Gross Negligence” in discharge of their responsibilities.


April 30, 2008


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