The Increasing Cyber Menace in NBFCs: A Threat to Financial System Stability

I have been doing this a long time—back when Slammer was bringing down entire networks in minutes, and firewalls were largely just ACLs slapped on routers. But here’s the thing. Cybercriminals are much more organized these days. And NBFCs? They’re a treasure trove for attackers.

I’m just back from DefCon (still buzzing about some of the things I saw at the hardware hacking village) and one thing was clear—finance is under siege. Big banks are not the only ones, NBFCs are also prime targets. And the scary part? Most NBFCs are so far behind on cybersecurity.

Let’s look at why attackers are so keenly focused on NBFCs, how recent attacks have rocked the industry, what’s at risk, and most importantly, how to safeguard your NBFC from the next hit.

Quick Take

Short on time to dig deeper? Here’s what you need to know:

• NBFCs are among the key targets since they deal with higher volumes of financial transactions and as such they do not have banking standard security.
• Top cyber risks: ransomware, phishing, and insider threats.
• The most recent attacks targeting financial organizations indicate that attackers are actively searching for weak security postures.
• The financial toll is punishing — operational downtime, direct theft of funds, compliance-related penalties.
• Implementing Zero Trust, real-time monitoring, and training employees drastically reduce risk.

Now if you are still with me—let us go into the sordid details.

The Kyber Network Highlights The Key Threat Vectors Targeting NBFCs

1. Ransomware Isn’t Going Anywhere

I have been saying this for years—ransomware services are not a fad; it is a business model. And that makes NBFCs a favorite target for attackers, as they don’t have the luxury of downtime. Customers panic when financial transactions grind to a halt.

How they get in:

• Phishing emails.
• Attacking un-patched servers and legacy systems.
• Compromised remote access credentials (RDP is still a security nightmare).

The impact:

• Data encryption resulting in infrastructure being completely locked.
• Mega ransom demands — often in the millions.
• Data leaks in the event the ransom is not paid.

2. Phishing: Still the #1 Entry Point

No zero-days required when a simple email gets an attacker inside. One of my clients suffered a ₹2.9 crore ($360K) loss due to a fake vendor invoice scam by an employee. Just one email.

Modern phishing tactics:

• Executive-targeted spear-phishing with very tailored attacks.
• Business Email Compromise (BEC): Criminals compromise CEO emails and request funds to be transferred.
• Deepfake voice scams: Yes, AI is being used—but not the way vendors claim it is.

3. The Dangers From Here Inside: Insider Threats

This one falls under the radar a lot—but some of the biggest heists happen with insider help. Employees of the non-banking finance companies (NBFCs) unknowingly or knowingly become the vectors of attacks.

Insider threats:

• Employees selling information or embedding malware.
• Their credentials are compromised and used for fraud.

In all honesty, a user behavior monitoring system should be a top priority of every NBFC as far as security is concerned.

Recent Cyber Attacks on NBFCs

Let’s talk actual incidents.

• Infection: An employee of a mid-sized NBFC in Mumbai clicked on a phishing email that led to ransomware infection. The attackers had encrypted ALL of their data — customer records, loan application data, transaction logs. The ransom demand? Over ₹5 crore. They had no proper backups. It took weeks to bounce back, and the costs were brutal.
• A New Delhi-based lending platform found its customer database leaked online. An ex-employee, it turned out, still had VPN access. If they had implemented proper access controls, this wouldn’t have happened.
• Another NBFC had its entire website defaced by attackers. Sounds minor? Turns out customers freaked out, thinking they’d been hacked as well. Most withdrew their investments. Trust obliterated in a matter of hours.

These aren’t just headlines — these are real cases that I’ve been involved with. And I see them all the time.

Fundamental Changes in Financial Operations

Here is where the pain hits hardest. If your NBFC gets compromised, it’s not only technical issues that you are handling — you are handling:

• Financial loss: Direct theft via fraud or unauthorized transfers. Ransom payments (which I never advocate paying—but some people do).
• Regulatory trouble: Reserve Bank of India (RBI) issues stringent security guidelines. A breach could lead to audits, fines, and even operational restrictions.
• Customer trust erosion: When people lose trust in your security, they take their business elsewhere.
• Downtime = revenue loss: You’re hemorrhaging money every hour your systems are down.

Want a good analogy? Cybersecurity is akin to brake maintenance on your automotive vehicle. Ignoring it for long enough, and eventually, you hit a wall.

Tackling FSD: Mitigation Strategies for NBFCs

I updated three banks recently with the latest around Zero Trust frameworks and it is possibly THE BEST way I have seen a bank secured. But let’s deconstruct it into particular actions:

1. Implement Zero Trust Security

• No implicit trust.
• Two-factor authentication (MFA) on everything.
• Least privilege access — users have ONLY the permissions they require.

2. Upgrade Firewalls & Network Security

• Upgrade your firewall if it is more than three years old. Deep packet inspection (DPI) and next-gen filtering are required in modern attacks.
• Segment your network. If a system is breached make sure it can’t spread.

3. Continuous Monitoring and Threat Detection

• Real-time SIEM (Security Information and Event Management) is NO longer an optional add-on.
• Informs of insider threats before it’s too late.

4. Employee Information Security Awareness Training

Honestly? This is likely the highest ROI on security expenditure. Educate your employees on what to look for in phishing and social engineering attacks.

5. Patch. Patch. PATCH.

• The easiest way in = unpatched servers and apps.
• Automate patching as a policy—not an afterthought.

6. Backup All the Things (But Do It Securely)

• Have an offline backup that even ransomware can NOT touch.
• Test your restoration process—backups fail more than you think, and the only way to know is through testing.

Final Thoughts

NBFCs are the Achilles heel of India’s financial cybersecurity supply chain. Attackers are well aware of this — and they’re taking full advantage.

I’ve spent decades in the hunt for cyber threats (starting back when we walked around with large PDUs and muxes to network with). And if there’s one thing I have learned, it’s this: Your security is only as good as your weakest link.

So—patch your systems. Train your people. Lock down your network. Because attacks are not a question of if, they are a question of when.

Trust me—you do not want to find that out the hard way.