AI-Powered Cyberattacks Threaten Indian Banks: CERT-In Warns of New Hacking and Financial Fraud Risks

AI Cyberattack Alert 2026: Artificial intelligence is rapidly transforming the digital world, but cybercriminals are also exploiting the technology to develop more sophisticated hacking techniques. India's cybersecurity agency, the Indian Computer Emergency Response Team (CERT-In), has raised concerns about attackers using AI-powered tools to target the country's banking and financial services sector.

According to a report published by Aaj Tak on November 5, 2026, cybercriminals are increasingly attempting to use artificial intelligence to identify security weaknesses, create convincing fraudulent messages and carry out cyberattacks against financial institutions.

The warning comes amid growing concerns about the security of banking systems, customer information and digital financial transactions.

As millions of Indians rely on mobile banking, UPI, internet banking and other digital services, the misuse of AI has emerged as an important cybersecurity challenge for banks, businesses and individual customers.

CERT-In Issues Critical Warning About AI-Driven Cyberattacks

On November 4, 2026, CERT-In issued a critical cybersecurity advisory identifying an active hacking campaign targeting India's banking, financial services and insurance (BFSI) sector.

The agency's financial-sector response team, CSIRT-Fin, has identified the threat actor as CRAFTY FALCON.

According to the advisory, attackers are using AI-assisted technologies to automate cyber intrusions, identify weaknesses in financial systems and attempt unauthorised fund transfers.

The warning covers several categories of financial institutions, including banks, non-banking financial companies (NBFCs), digital lending platforms, fintech businesses, payment aggregators and cryptocurrency exchanges.

CERT-In has described the threat as active and ongoing, urging financial institutions to strengthen their cybersecurity arrangements immediately.

How Are Hackers Using Artificial Intelligence to Attack Banks?

Traditional cyberattacks often require considerable manual effort to identify vulnerabilities and exploit them.

However, AI-assisted tools can automate parts of this process, allowing attackers to conduct multiple operations rapidly.

According to CERT-In, the attackers have been using publicly available AI-enabled security tools to generate customised scripts, analyse responses from targeted systems and adjust their methods.

The agency identified four tools associated with the campaign:

These tools can have legitimate security-testing applications. The concern arises when criminals use them without authorisation to compromise financial systems.

CERT-In warned that the technology enables attackers to operate at extremely high speeds, making detection and response more challenging for security teams.

Hackers Target Payment Systems to Transfer Money Illegally

One of the most serious concerns highlighted in the advisory involves attacks on payment and disbursement systems.

Cybercriminals have reportedly attempted to exploit weaknesses in application programming interfaces, commonly known as APIs.

These interfaces allow banking applications, payment platforms and financial services to communicate with one another.

When security controls are inadequate, attackers may attempt to manipulate these systems to initiate unauthorised transactions.

CERT-In has also identified incidents in which attackers carried out very small test transactions, sometimes involving just ₹1, before attempting larger transfers.

Such activity can help criminals determine whether compromised payment systems will process unauthorised requests.

The agency has advised financial institutions to monitor unusual transaction patterns, particularly small payments to new beneficiaries followed by larger transfers.

Cybercriminals Exploit Weekends and Festival Holidays

Another important finding concerns the timing of attacks.

CERT-In observed that some cybercriminals deliberately targeted financial organisations during weekends, public holidays and other periods when security monitoring might be reduced.

These periods can create opportunities for suspicious activity to remain undetected for longer.

The agency also reported that some organisations were targeted again after previously identified security weaknesses had not been fully addressed.

This highlights the importance of continuous monitoring and complete security remediation rather than temporary fixes.

CERT-In has recommended round-the-clock surveillance and stronger incident-response arrangements, particularly during periods of reduced staffing.

SBI Customer Data Exposure Raises Additional Concerns

The cybersecurity warning comes amid separate reports involving customer data associated with the State Bank of India.

According to reporting by The Economic Times, SBI has been investigating a suspected cybersecurity incident involving approximately 3,897 customer records.

The bank has been examining the possible source of the exposure and identifying weaknesses that may require corrective action.

However, the reported SBI incident should not automatically be linked to the CRAFTY FALCON campaign.

CERT-In has not publicly established that the same threat actor was responsible for the SBI data exposure.

What Has CERT-In Advised Banks and Financial Companies?

The cybersecurity agency has recommended several protective measures to help financial institutions reduce their exposure to AI-assisted attacks.

These include strengthening monitoring of cloud infrastructure, restricting unauthorised access to critical systems, protecting payment APIs and identifying unusual financial transactions.

Organisations have also been advised to isolate compromised systems, preserve forensic evidence and replace exposed credentials after suspected breaches.

For cryptocurrency platforms, CERT-In has recommended stronger safeguards for digital wallet keys and additional authorisation controls for withdrawals.

The agency has emphasised that financial institutions should treat the campaign as an immediate cybersecurity concern rather than waiting for further incidents.

How Can Banking Customers Protect Their Money?

Although the CERT-In advisory primarily addresses institutional cybersecurity, individual banking customers should also follow basic digital safety practices.

Customers can reduce their exposure to common financial scams by taking the following precautions:

1. Never share OTPs, UPI PINs, banking passwords or card security details.

2. Avoid installing APK files received through WhatsApp, SMS or unknown websites.

3. Download banking applications only from official app stores.

4. Enable transaction notifications to identify suspicious activity quickly.

5. Avoid clicking links claiming that a bank account will be blocked unless KYC is updated immediately.

6. Verify unexpected calls or messages directly with the bank through official contact channels.

7. Report unauthorised transactions to the bank immediately.

These precautions can help protect customers against phishing and account-related fraud, although they cannot independently prevent attacks against a bank's internal systems.

What Should You Do If Money Is Stolen Through Cyber Fraud?

If you notice an unauthorised banking transaction, immediately contact your bank and request appropriate account or payment restrictions.

You can also report financial cybercrime through India's national cybercrime helpline, 1930, or the official National Cyber Crime Reporting Portal.

Preserve transaction messages, reference numbers, screenshots and other relevant evidence.

Prompt reporting is important because it may improve the chances of intervention and can affect customer liability under applicable banking rules.

Why AI-Based Cybersecurity Threats Matter for India

India's expanding digital financial ecosystem includes banks, payment companies, lending platforms, fintech applications and numerous technology service providers.

These interconnected systems make financial transactions more convenient but also increase the number of potential security weaknesses that organisations must manage.

AI-assisted attacks add another challenge because attackers can automate activities that previously required more time and manual intervention.

Financial institutions therefore need effective security controls, continuous monitoring, trained cybersecurity teams and reliable incident-response procedures.

Conclusion

CERT-In's November 2026 advisory highlights the growing threat posed by AI-assisted cyberattacks against India's financial sector.

The CRAFTY FALCON campaign demonstrates how criminals can misuse automation to identify vulnerabilities, target payment systems and attempt unauthorised transfers.

While banks and fintech companies are responsible for protecting their infrastructure, customers should remain cautious about suspicious messages, fraudulent applications and unauthorised transactions.

The key message is clear: artificial intelligence is becoming an important tool in cybercrime, making stronger cybersecurity and faster fraud detection increasingly essential.