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INDUSTRY FACT FILE · BANKING

Industry Overview: The Banking Sector in India

The types of banks and industry players, how they are owned and supervised, who buys cybersecurity inside them, and why each needs a distinct approach.

In this document

1. Why banking cybersecurity matters now

2. The banking ecosystem at a glance

3. Categories of banks and industry players

4. Government, public-sector and private ownership

5. Who buys cybersecurity inside a bank

6. Why each bank type needs a different approach

7. How Codec Networks works with banks

Sector scope

Sector: Banking — public and private sector banks, foreign bank branches, small finance banks, payments banks and co-operative banks.

Primary service proposition: regulatory assurance, VAPT, SOC and resilience.

1. Why banking cybersecurity matters now

Banks hold the country's deposits, run its payment systems and extend most of its formal credit. Every one of those activities now runs on digital channels, shared payment rails and third-party technology. That makes banks the most valuable target in the economy—for fraud rings, ransomware groups and nation-state actors alike.

₹48,021 cr

Frauds reported by banks and FIs in FY26 (RBI Annual Report)

6 hours

To report cyber incidents to RBI on DAKSH

29 banks

Using RBIH's MuleHunter.AI (July 2026)

31 Jul 2026

RBI's new cybersecurity Directions for banks

On 31 July 2026 the Reserve Bank of India (RBI) issued a new set of cybersecurity Directions—the Cybersecurity, Technology: Risk, Resilience and Assurance Framework—separately for commercial banks, small finance banks, payments banks and urban co-operative banks, among others. They took effect immediately and repealed the earlier cybersecurity and IT governance instructions for these entities. For every bank, cybersecurity is now a Board-level, continuously supervised obligation.

Key takeaway

Banks are judged on three things at once: the safety of customer money, the availability of their channels and their standing with the supervisor. Each one depends on demonstrable cybersecurity.

2. The banking ecosystem at a glance

India's banking system includes several categories of banks with different licences, ownership models and supervisors. All of them connect to shared payment rails, technology providers and partner ecosystems—so a weakness in one place can travel across the system.

Title: Figure 1: The Indian banking ecosystem — bank categories, customers, channels and shared infrastructure. - Description: Figure 1: The Indian banking ecosystem — bank categories, customers, channels and shared infrastructure.

Figure 1: The Indian banking ecosystem — bank categories, customers, channels and shared infrastructure.

3. Categories of banks and industry players

The table summarises the main categories of banks, their typical ownership and the primary regulatory basis for their cybersecurity obligations.

Bank category	Who they are	Typical ownership	Cybersecurity framework (as of October 2026)
Public sector banks	Twelve public sector banks, including the State Bank of India, with very large branch and customer networks	Government of India majority-owned	RBI Commercial Banks – Cybersecurity, Technology: Risk, Resilience and Assurance Framework Directions, 2026
Private sector banks	Domestic private banks, from large universal banks to smaller regional banks	Private shareholders; many listed	RBI Commercial Banks Directions, 2026
Foreign bank branches and subsidiaries	International banks operating in India through branches or wholly owned subsidiaries	Foreign parent banks	RBI Commercial Banks Directions, 2026 — foreign bank branches follow a 'comply or explain' approach for specified chapters
Small finance banks	Banks focused on financial inclusion, small businesses and underserved customers	Private promoters; many converted from microfinance or NBFC businesses	RBI Small Finance Banks Directions, 2026 (issued the same day)
Payments banks	Banks that accept limited deposits and provide payments and remittance services, without lending	Telecom, technology, postal and financial groups	RBI Payments Banks Directions, 2026 (issued the same day)
Urban co-operative banks	Co-operative banks serving urban and semi-urban communities	Member-owned co-operative societies	RBI Urban Co-operative Banks Directions, 2026 — graded into four levels by digital depth
Rural co-operative banks	State co-operative banks and district central co-operative banks	Member-owned; state-level co-operative structures	Supervised by NABARD; follow the cybersecurity framework applicable to them
Regional Rural Banks	Rural banks jointly owned by the Government of India, state governments and sponsor banks; consolidated to 28 under the 'One State, One RRB' amalgamation in 2025	Government and sponsor banks	Supervised by NABARD; follow the cybersecurity framework applicable to them
Local Area Banks	Small private banks operating in limited geographies	Private promoters	RBI Local Area Banks supervisory directions
Banking technology providers	Core banking, ATM switch, card processing, data-centre, cloud and fintech partners	Private Indian and international technology companies	Not directly licensed; governed through banks' outsourcing and third-party requirements, including baseline controls for ATM switch providers

Bank versus bank-like institutions

NBFCs, housing finance companies, fintech lenders and payment companies are covered in separate Codec Networks industry fact files. Banks frequently partner with them through co-lending, business correspondent, sponsor-bank and banking-as-a-service arrangements—which brings their security into the bank's own risk perimeter.

4. Government, public-sector and private ownership

4.1 Government and public-sector participants

Public sector banks are majority-owned by the Government of India and serve government business, welfare transfers and a large share of rural and semi-urban customers.
Regional Rural Banks are jointly owned by the Government of India, state governments and sponsor banks. Following the 'One State, One RRB' amalgamation effective in 2025, there are 28 RRBs.
India Post Payments Bank is a payments bank owned by the Department of Posts, Government of India.
Development and refinancing institutions such as NABARD, SIDBI, EXIM Bank and NHB are All India Financial Institutions; RBI issued a separate 2026 cybersecurity Direction for them.
Government departments and PSUs are major corporate customers whose collections, payroll and disbursements run through bank platforms.

4.2 Corporate and enterprise banks

Private sector banks, foreign banks, small finance banks and payments banks are corporate enterprises with shareholders, Boards and, in many cases, stock-exchange listings. Their security needs scale with balance-sheet size, digital-channel volume, number of fintech and co-lending partnerships and the complexity of their technology estate.

Segment	Characteristics	Typical cybersecurity priorities
Large public and private sector banks	Very large customer bases, many channels, complex legacy and modern systems side by side	Board and ITSC governance, 24x7 CSOC, red teaming, third-party assurance, crisis management
Mid-sized private banks	Rapid digital growth, fintech partnerships, lean security teams relative to scale	Digital channel and API security, managed SOC, regulatory evidence
Foreign bank branches	Group security standards with local Indian obligations	Local gap assessment, data localisation, comply-or-explain documentation
Small finance and payments banks	Digital-first, inclusion-focused, high transaction volumes, outsourced technology	Mobile and API testing, fraud and mule monitoring, vendor risk
Co-operative banks	Resource constraints, sponsor-bank or shared-service dependence, legacy systems	Graded baseline controls, shared SOC, backup and recovery, awareness

5. Who buys cybersecurity inside a bank

Under RBI's 2026 Directions for commercial banks, the Board oversees technology and cyber risk; an IT Strategy Committee of at least three directors, chaired by an independent director with substantial IT experience, meets at least quarterly; and a CISO at General Manager or equivalent level reports to the Executive Director overseeing risk management—not to the Head of IT.

Stakeholder	What they care about	What they buy
Board and IT Strategy Committee	Material cyber risk, supervisory standing, resilience	Board advisory, risk dashboards, crisis exercises
Audit Committee of the Board	Independent IS audit and assurance	IS audit support, control testing, evidence reviews
CISO and information security team	Control effectiveness, monitoring, vulnerability closure	VAPT, CSOC, threat hunting, red teaming
CIO / CTO and digital banking heads	Channel availability, secure change, modernisation	Application and API testing, DevSecOps, cloud reviews
Chief Risk Officer and fraud risk	Fraud losses, mule accounts, operational risk	Fraud-scenario testing, mule analytics, investigations
Compliance and Principal Officer	RBI, CERT-In, FIU-IND obligations	Regulatory gap assessments, reporting readiness
Data protection lead	DPDP readiness, customer data handling	Privacy programme, DLP, data-flow mapping
Vendor management and procurement	Third-party and outsourcing risk	Vendor assessments, ATM switch and cloud provider reviews

6. Why each bank type needs a different approach

Bank type	Highest-consequence risk	Starting point for assurance
Public sector bank	Ransomware and outages across a large legacy estate; insider and privileged misuse	Resilience and DR testing, privileged-access audit, CSOC maturity review
Private sector bank	Account takeover, API exposure through fintech partners, rapid change	Digital channel and API testing, DevSecOps, partner assurance
Foreign bank branch	Gaps between group controls and Indian requirements	Local control-gap assessment and comply-or-explain documentation
Small finance bank	Mule accounts, mobile fraud, outsourced technology	Mobile app testing, fraud monitoring, vendor risk assessment
Payments bank	High-volume digital payments and agent-network fraud	Payment interface testing, device and authentication review
Co-operative bank	Weak baseline controls, shared-service dependence, backup failures	Graded baseline assessment, backup and recovery testing, shared SOC

7. How Codec Networks works with banks

Codec Networks is a CERT-In empanelled information security auditing organisation certified to ISO 9001:2015, ISO/IEC 27001:2022 and ISO/IEC 20000-1:2018. For banks, our work combines four strands:

Regulatory assurance: gap assessments against RBI's 2026 Directions, IS audit support, PCI DSS, SWIFT CSP and ISO 27001 readiness, and Board and ITSC reporting.
VAPT: vulnerability assessment at least every six months and penetration testing at least annually for critical and customer-facing systems, plus application, API and source code testing.
SOC: a managed or co-managed CSOC with Level 1–3 analysts, SIEM, EDR/XDR, fraud-signal correlation and anti-phishing and rogue-app monitoring.
Resilience: ransomware readiness, backup and DR testing, Cyber Crisis Management Plans, tabletop exercises and forensic incident response.

Talk to Codec Networks

Contact

Codec Networks Pvt. Ltd.

New Delhi: 507, 5th Floor, New Delhi House, Barakhamba Road, Connaught Place, New Delhi – 110001

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Email: mktg@codecnetworks.com Web: www.codecnetworks.com

Note: This document is general industry guidance based on public information available as of October 2026, including RBI, NABARD, CERT-In and MeitY publications. Requirements differ by bank category; confirm obligations against the current official Directions before making compliance decisions. Fraud statistics relate to frauds of ₹1 lakh and above reported to RBI.