Financial sector to be vigilant on cybersecurity: FM
Union Finance Minister Nirmala Sitharaman on Saturday urged all entities in the financial sector to be ‘exceptionally vigilant’ on cybersecurity.
Without naming Mythos, the newly minted platform from leading AI company Anthropic, Sitharaman said artificial intelligence tools are making cyberattacks faster and more adaptive.
Such tools can also evade detection by deploying tactics like automated discovery of system vulnerabilities and malicious source-code interference, she added“... not just Sebi but all regulated entities will have to remain exceptionally vigilant.
The tools of attack are evolving at high speed, and the tools of defence must evolve even faster,” Sitharaman said, speaking at the 28th foundation day event of the capital markets regulator.
The comments come amid heightened fears over the capabilities of Mythos, which has sent regulators and policymakers scrambling around the world to understand the platform and ways to safeguard their systems.
The government had called a meeting of top bankers with ministers, including Sitharaman and IT minister Ashwini Vaishnav, in New Delhi on Thursday, where it announced the formation of a dedicated panel under SBI chairman C S Setty for the purpose.
On Saturday, Sitharaman warned that a single successful cyberattack on a major exchange, depository, or a large broker can disrupt markets on a national scale, erase wealth, and shake public confidence and urged Sebi to meet the emerging challenge of cybersecurity.
Sitharaman urged Sebi to institutionalise a system of periodic consultation with its peers across the world, making it clear that Indian regulations must not imitate other countries.
In comments made amid unease over foreign flows, Sitharaman said that such dialogue between regulators can give confidence to global capital.
“The more SEBI’s frameworks are understood abroad, the greater the confidence of global capital in Indian markets,” and the greater the weight SEBI carries in global rulemaking,” she said.
Sitharaman also exhorted the financial system to progress towards the goal of common know your customer (KYC) across all functions.
“It is the shared responsibility of all stakeholders to ensure that no citizen has to repeat the same verification journey across multiple financial products and platforms,” she said, urging Sebi to help drive the prescription of common KYC norms.
On the regulations front, the FM pitched for a soft-touch, public consultation-based approach to form principles-based rules rather than “overly detailed rulebooks”.
There is a need for regulations to not be restrictive, and be more sophisticated and anticipatory rather than merely reactive, the FM said. Sitharaman said Sebi’s recent actions against unregistered ‘fin influencers’ should be seen as the regulator’s seriousness to crack down against unlicensed financial advice, and underlined the need for more efforts on financial education.
“... we should not tolerate the monetisation of uninformed retail investor trust for personal enrichment,” she added. With progress in technology, there is an explosion of fake investment videos and apps circulating on social media, many of them using deepfake AI to impersonate leaders, she noted.
The minister asked Sebi to “invest very substantially” in public awareness, through campaigns on every major platform in regional languages, and through rapid-response takedown mechanisms for fraudulent content impersonating public officials.
There is a need for investor protection to evolve from a “defensive function into a developmental function”. A “serious push” is required to make municipal bonds a more effective platform for raising money, she said, adding that urban infrastructure cannot be financed by budgetary support alone.
On the corporate bond market front, she pushed for more to build a more effective credit enhancement architecture so that access to bond markets is not confined only to the highest-rated issuers.
“... we want better markets, not merely bigger markets. Size without integrity is fragility. Volume without investor protection is exploitation. Growth without governance is unsustainable,” Sitharaman said.
