The Indian Banks’ Association (IBA) is building an AI-focused cybersecurity framework for lenders that will set up structured, real-time sharing of cyber incidents across banks, regulators and security agencies, IBA Chairman and State Bank of India (SBI) Chairman Challa Sreenivasulu Setty said on 3 November 2026. The industry body is also working on a sandbox to test front-end AI models before banks deploy them.
Setty made the remarks at SBI’s Q2 FY27 media interaction, weeks after the lender detected a suspected cyberattack that exposed 3,897 SBI customer records on the dark web.
What the IBA cyber incident sharing framework covers
According to Setty, structured information sharing is a key pillar of the framework the IBA is drafting. When one bank detects an attack, the details should reach the rest of the banking system immediately so that other lenders can block the same route before it is used against them.
The flow is not meant to stop at banks. Setty said information must also go to regulators and the relevant security agencies, such as the Indian Computer Emergency Response Team (CERT-In), so that the wider financial system can respond to new threats in time.
- Incident sharing: immediate alerts across member banks when a cyber event is detected.
- Regulator and agency loop: the same information passed to regulators and national security agencies.
- AI sandbox: an industry-level, controlled environment to test front-end AI models for weaknesses before go-live.
Why banks need an AI sandbox before production
Setty said the use of AI is changing the nature of cyber risk, and that every new digital channel widens the banking sector’s attack surface. “You cannot deploy AI tools straight into production. You have to test it separately, identify the vulnerabilities quickly and then patch them,” he said.
He noted that SBI does not yet use front-end AI models extensively and that adoption across the sector remains limited. The concern is real, though: Elets BFSI recently reported how AI agents at Indian banks have overstepped their tasks, including a near-miss fake investment offer at HDFC Bank. Setty’s answer is to fight AI with AI, deploying AI-based defence tools against AI-enabled attacks.
SBI’s response to the dark-web data exposure
SBI received alerts on 16 October 2026 from its threat intelligence provider, the Defence Cyber Agency and CERT-In about suspected exposure of customer data. A preliminary review of about 3,75,000 records found online identified 3,897 containing personal details such as names, mobile numbers, dates of birth and addresses.
The bank has appointed an independent CERT-In-empanelled agency, is running a root-cause analysis and has carried out a cybersecurity drill covering API and vulnerability assessments. It says the incident had no material impact on operations. Setty added that spending on cybersecurity will not be a constraint, building on the SBI CyRIS cybersecurity centre of excellence launched in October.
A wider cyber push across Indian lenders
The IBA move comes as Bank of Baroda, AU Small Finance Bank and Spandana Sphoorty Financial have also faced cyber incidents in recent months, and as the Reserve Bank of India tightens cyber checks on banks and their fintech and NBFC API links. A shared early-warning system could help smaller lenders most, since they often lack the in-house threat intelligence that large banks can afford.
Key takeaways
- The IBA is drafting an AI-related cybersecurity framework built around structured, immediate incident sharing among banks, regulators and agencies.
- An industry-level sandbox will let banks test front-end AI models before deployment.
- SBI is completing a root-cause analysis after 3,897 customer records were found on the dark web.
FAQ
What is the IBA cyber incident sharing framework?
It is an AI-focused cybersecurity framework being drafted by the Indian Banks’ Association under which a cyber incident at one bank is shared at once with other banks, regulators and security agencies.
Has the IBA AI sandbox launched?
Not yet. Setty said on 3 November 2026 that the IBA is working towards it; no launch date has been announced.
Featured image: SBI Chairman C S Setty with DFS Secretary Sanjay Lohiya and SBI leaders at the CyRIS launch. Photo: State Bank of India (handout).
