RBI asks banks to change debit cards with magnetic strips

PATNA: The ongoing chaos over debit card data breach is acting as a spoilsport for people this festive season.
Reserve Bank of India (RBI) officials in Patna say all the banks have been asked to change their magnetic strip-based debit cards with chip-based cards. The SBI has blocked a large number of ATM cards in the state as a preventive measure. Besides, all major banks have asked their customers to change PIN (personal identification number) of their debit cards.
“We have received complaints from around 25 customers over the past few days about unauthorised debit from their bank accounts. The unauthorised debit is in the range of Rs 5,000-50,000. Consequently, we are blocking debit cards of such customers. Besides, a large number of people are coming to banks everyday asking about the security issues related to their ATM cards. We are blocking ATM cards as a preventive measure,” said an SBI executive.
Sources in the banking industry claimed that though all the banks are affected by the debit card security breach, the SBI, Axis Bank, ICCI and Yes Bank are the worst affected. “We are also advising people not to use their debit card on ATM of other banks,” said an executive of the RBI.
Sources said the security breaches started around a month ago when people started observing unauthorised withdrawal of money from their accounts. A senior SBI executive claimed that comparatively older cards, which have the black magnetic strips on their back and do not need ‘one-time password (OTP)’, were more at risk.
“Various essential information related to the bank accounts are coded in the magnetic strip, which the ATM reads to process the request of the customer. The malware or virus in the server of one of the companies providing ATM services to Indian banks started copying the details of the debit cards through the affected ATMs. In most cases, the hacked information has been used for electronic or online transfer of the money from the source account to the hackers account or online purchases. This is simpler in case of old debit cards, which don’t require OTPs,” said the SBI executive.
He said many banks are now replacing the old debit cards with chip-based cards, but the process might take a few weeks to complete. “Though SBI has blocked around 6-7 lakh debit cards across the country, it is being estimated that around 40 lakh cards would need to be blocked to completely recover from the security breach,” said the SBI official.
Banking experts claimed that the chip-based cards are comparatively more secure than the magnetic strip cards. “The chips are difficult to be hacked. Though these cards are in the premium category and involve more charges, many banks are likely to issue these cards for free,” said a member of state-level bankers’ committee in Patna.