Entire Rs 9,000 cr erroneously transferred to Tamilnad Mercantile Bank account recovered: MD & CEO

On September 9, 2023, a Tamil Nadu taxi driver's bank account was mistakenly credited with Rs 9,000 crore.

Thoothukudi-based Tamilnad Mercantile Bank (TMB) has recovered all of the Rs 9,000 crore erroneously transferred to a cab driver’s account, said Managing Director and Chief Executive Officer (MD & CEO) S Krishnan. "The incident that happened in September was due to some technical glitch. The error was identified and rectified in the meantime," said Krishnan in an interaction with Moneycontrol on January 23.

The MD & CEO of TMB added that the bank—which announced its third quarter numbers on Monday, January 22—also has constituted a committee to look into the accountability of such transactions.

"We need to figure out how we can permanently track these types of transactions and, more importantly, how we can prevent the recurrence of such incidents. So, towards that, I can tell you that now, we have put in place a system that is a straight-through process," the CEO said.

Also read: Man left shocked after getting Rs 9,000 crore in bank account: report

On September 9, 2023, a Tamil Nadu taxi driver's bank account was mistakenly credited with Rs 9,000 crore, giving the private sector bank a dose of unwelcome publicity. "After a long spell at work, I took a short nap in the afternoon (on September 9). Around 3 pm, I received a message from my bank (TMB) about money being deposited in my account. At first glance, I could not even comprehend the amount as it had so many zeroes in it," Rajkumar, a resident of Neikkarapatti village near the temple town of Palani, told The Times of India last September.

The bank realised the mistake within half an hour, by which time Rajkumar had transferred Rs 21,000 to a friend's account. The bank has since recovered the amount.

In recent times. several banks have faced technical glitches issues. For instance, on November 15, 2023, UCO Bank reported that during November 10-13, certain Immediate Payment Service transactions initiated by holders of other banks had resulted in credit to the account holders in UCO Bank without actual receipt of money from these banks.

Earlier, in July 2023, Bank of Baroda’s digital mobile application BoB World was compromised, where contact details of different people were linked together to increase the number of mobile application registrations. After this, the Reserve Bank of India (RBI) asked the state lender to stop taking new customers through BoB World. The RBI also said that any further onboarding of customers on the app will be subject to rectification of the deficiencies observed and strengthening of the related processes by its satisfaction.

Minister of State for Finance Bhagwat Karad on December 18 said that the Department of Financial Services met in late November to discuss issues related to cybersecurity in the financial services sector and increasing incidents of recent online financial frauds.

Also read: Tamilnad Mercantile Bank reports Rs 284 crore net profit in Q3

Regulators have also cautioned banks against the possible pitfalls arising from increasing tech adoption. Recently, on December 22 while delivering a speech at the 106th Annual Conference of the Indian Economic Association in Delhi, RBI Deputy Governor M Rajeshwar Rao flagged concerns surrounding financial institutions using artificial intelligence.

Rao said that these concerns are design-specific risks such as biases and robustness issues, while others are more traditional and user-specific such as data privacy, cybersecurity, consumer protection and preserving financial stability.

"Further, humans can collaborate, combine and brainstorm to reach an optimal solution. This is not to say that humans are free of biases, but we have embedded checks and balances in the institutional decision-making framework to check and prevent them," Rao added.

TMB reported a net profit of Rs 284 crore for the October-December 2023 quarter, it said on Monday. The bank's total income during the quarter under review grew to Rs 1,387 crore from Rs 1,173 crore registered in the same period last year.

The total business of the bank during the October-December 2023 quarter surged to Rs 85,185 crore from Rs 78,242 crore in the same period last year. In a BSE filing, the bank said it has been giving continued thrust on advances to priority sectors like agriculture, micro, small, and medium enterprises, and housing, constituting 75 percent of the adjusted net bank credit, which is above the regulatory requirement of 40 percent.