In the shadow of escalating geopolitical tensions, India’s financial sector stands as a prime target in a silent but ferocious war unfolding in cyberspace. The spectre of a cyberattack from Pakistan, particularly amid recent hostilities like the 2025 Pahalgam terror attack and India’s retaliatory Operation Sindoor, looms large. Indian banks, the backbone of the nation’s digital economy, face an unprecedented challenge: safeguarding vast troves of sensitive data and critical infrastructure against sophisticated cyber adversaries.
As Pakistan-based hacker groups like the Pakistan Cyber Force sharpen their digital arsenal, the question is not whether Indian banks can be targeted, but whether they are equipped to repel such an assault. The answer lies in a complex interplay of robust defenses, glaring vulnerabilities, and the urgent need for systemic reform.
The Indian banking sector has undergone a digital renaissance, with platforms like the Unified Payments Interface (UPI) processing billions of transactions monthly and mobile banking apps becoming ubiquitous. This transformation has made banks lucrative targets for cybercriminals, especially those backed by hostile state or non-state actors. The Indian Computer Emergency Response Team (CERT-In) warned in May 2025 of heightened risks to the Banking, Financial Services, and Insurance (BFSI) sector, specifically flagging Pakistan-based groups orchestrating phishing campaigns, data breaches, and website defacements.
The Pakistan Cyber Force, for instance, claimed to have breached sensitive data from India’s Military Engineer Services and attempted to deface the website of Armoured Vehicle Nigam Limited, a defence PSU, in early May 2025. While these attacks targeted defence entities, they signal a broader intent to disrupt India’s critical infrastructure, with banks squarely in the crosshairs.
Indian banks are not unprepared. The Reserve Bank of India (RBI) has mandated a comprehensive Cybersecurity Framework for Scheduled Commercial Banks since 2016, requiring robust measures like real-time threat monitoring, multi-factor authentication, and incident response protocols. Following the 2025 India-Pakistan tensions, banks have fortified their defenses further.
Punjab National Bank’s CEO, Ashok Chandra, revealed the establishment of a 24/7 “war room” to counter cyber threats, with anti-DDoS systems and enhanced monitoring to detect suspicious activity. Major banks like State Bank of India operate state-of-the-art cybersecurity centers, such as SBI’s Hyderabad-based facility, which provides real-time oversight of digital channels. The Department of Financial Services has also directed banks to ensure uninterrupted services, stocking ATMs near border areas with cash and bolstering branch security to maintain public trust during crises.
These measures reflect a proactive stance, but the scale and sophistication of potential cyberattacks from Pakistan expose significant vulnerabilities. The Economic Survey 2024-25 reported that banks accounted for nearly one-fifth of India’s 1.39 million cybersecurity incidents in 2022, with phishing, ransomware, and Distributed Denial of Service (DDoS) attacks posing systemic risks.
A ransomware attack in August 2024 disrupted payment systems across 300 small Indian banks, highlighting the sector’s susceptibility to supply-chain vulnerabilities via third-party providers like C-Edge Technologies. Pakistan-based groups, potentially leveraging China’s advanced cyber capabilities as suggested by a 2023 study in the Journal of Asian Security and International Affairs, could exploit such weaknesses to devastating effect.
Advanced Persistent Threat (APT) groups like APT36, linked to Pakistan, have already deployed sophisticated phishing campaigns targeting Indian government entities, a tactic easily adaptable to banking systems.
The interconnected nature of India’s financial ecosystem amplifies these risks. UPI, managed by the National Payments Corporation of India (NPCI), handles over 50 billion transactions annually, making it a high-value target. A coordinated attack on NPCI’s infrastructure or SWIFT, the global payment network, could paralyse financial operations nationwide. CERT-In’s May 2025 advisory urged banks to monitor critical systems like UPI, RTGS, and NEFT closely, but the sheer volume of transactions strains existing defenses. Smaller banks, particularly urban co-operative banks and non-banking financial companies, which accounted for 31% of cyberattacks in 2023 per RBI data, lack the resources and expertise of larger institutions, creating weak links in the chain.
India’s cybersecurity infrastructure, while advanced, struggles with coordination and scalability. CERT-In and the National Critical Information Infrastructure Protection Centre (NCIIPC) lead national efforts, but their ability to orchestrate real-time responses across thousands of financial institutions is limited. The RBI’s 2024 Financial Stability Report noted that cyberattacks on banks caused $20 billion in losses over two decades, with 69% targeting scheduled commercial banks.
The report underscored the need for enhanced surveillance and resilience, yet the sector’s rapid digitization outpaces its ability to secure new technologies like cloud services and AI-driven banking apps. The Information Technology Act of 2000, India’s primary cybercrime legislation, is outdated, ill-equipped to address modern threats like AI-generated malware or quantum ransomware, which experts predict will dominate by 2025.
Pakistan’s cyber strategy, often executed through proxies to maintain plausible deniability, complicates attribution and retaliation. A 2020 study in Strategic Studies highlighted Pakistan’s growing cyber capabilities, bolstered by its strategic alliance with China, which provides technology and expertise. Post-Pahalgam, Pakistan-linked bots amplified disinformation on Indian OTT platforms, embedding malicious ads and deepfakes to sow public distrust.
Such psychological operations could easily target banking customers, phishing them en masse with fake “emergency alerts” or fraudulent apps. The RBI’s push for customer education campaigns is a step forward, but the scale of India’s 1.4 billion population makes widespread awareness a daunting task.
Despite these challenges, India’s cybersecurity ecosystem has notable strengths. The country ranks among the top tier in the Global Cybersecurity Index 2024, scoring 98.49 out of 100, driven by robust legal frameworks and initiatives like the National Cyber Security Policy. Banks have increased cyber insurance coverage by 8% in 2023-24, mitigating financial risks from breaches.
Collaborative efforts with industry bodies like NASSCOM and joint exercises with SAARC CERTs enhance threat-sharing and response capabilities. The Indian Army’s Cyber Emergency Response Team (CERT-A), while focused on defence, provides a model for rapid remediation that banks could emulate.
Yet, the sector’s preparedness hinges on closing critical gaps. Smaller banks need urgent investment in IT infrastructure and skilled personnel, as the current shortage of cybersecurity professionals—estimated at 1 million by 2020 per The Economic Times—persists. Regular “red-team” drills, as mandated for defence contractors post-2025 breaches, should become standard for banks to simulate real-world attacks.
The government must also modernize legal frameworks, empowering CERT-In with greater authority to enforce compliance across private institutions. Integrating AI-driven threat detection, already adopted by fintechs, could help banks stay ahead of polymorphic malware, but requires significant capital and expertise.
In the event of a full-scale cyberattack from Pakistan, Indian banks would likely face intense pressure but not collapse. Large institutions, backed by RBI guidelines and advanced security centers, are well-positioned to repel or mitigate attacks, as demonstrated by their response to 23,158 cybersecurity incidents in 2023.
However, smaller banks and third-party vendors remain vulnerable, risking cascading failures in the financial ecosystem. The government’s high-level advisories, including Finance Minister Nirmala Sitharaman’s review of bank preparedness in May 2025, signal urgency, but implementation lags behind intent.
As India and Pakistan navigate this tense chapter, the digital frontline will test the resilience of Indian banks. Their ability to withstand a cyber onslaught depends on blending cutting-edge technology with systemic reforms, from bolstering small banks to modernizing laws. For now, the sector stands on a knife’s edge—prepared but not impervious, vigilant but not invincible. The stakes could not be higher: a breach in the banking system would not only erode public trust but also destabilize the economy at a time when stability is paramount.