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Reserve Bank of India (RBI) | SEBI | IRDAI
The IMF Departmental Paper (2026) titled ‘Good Practices in Cyber Risk Regulation and Supervision’ consolidates nearly a decade of lessons from global technical assistance and stability assessments to define “good practices” for managing cyber risk in the financial sector. As cyberattacks in the financial sector have spiked—with losses increasing by over 500% in 2020 alone—the report advocates for a shift from fragmented IT rules to a unified, proactive technology-risk-management framework.
The report identifies several high-impact supervisory and regulatory strategies:
Unified Regulation: Regulators should integrate ICT and cyber-risk-management into a single, coherent framework to avoid overlapping or inconsistent requirements.
Presence over Complexity: The most significant factor in improving cybersecurity is the presence and thoroughness of the supervisor, rather than just the complexity of the rules.
The “5Rs” of Testing: Impactful oversight now relies on advanced Threat-Led Penetration Testing (TLPT), where “Red Teams” simulate real-world attacks on critical systems to find vulnerabilities before criminals do.
Proportionality: Regulation should follow a “one size does not fit all” approach—applying the highest standards to systemic institutions while adapting expectations for smaller, less complex firms.
Third-Party Oversight: With the massive reliance on cloud and fintech providers, the IMF recommends bringing critical Technology Service Providers (TSPs) under a direct cyber risk oversight framework.
What is Threat-Led Penetration Testing (TLPT)? It is a controlled, intelligence-driven exercise where a “Red Team” emulates the actual tactics and procedures of known hackers to test an institution’s people, processes, and technology. Unlike standard audits, TLPT provides a realistic assessment of an entity’s “Blue Team” (defenders) and their ability to detect and neutralize a sophisticated, stealthy intrusion in real-time.
Policy Relevance
For India, which is home to one of the world’s largest digital payment ecosystems (UPI) and is a top target for global cyber threats, these IMF practices are highly relevant for the RBI, SEBI, and IRDAI. India’s financial stability increasingly rests on the “operational resilience” of its digital public infrastructure.
Strategic Impact for India:
Scaling Financial Stability: The report’s focus on Cyber Mapping is critical for India to identify systemic “single points of failure” within its interconnected web of banks, fintechs, and payment aggregators.
Capacity Building: India’s regulators can adopt the IMF’s Cyber Risk Supervisory Toolbox to upskill generalist supervisors, addressing the acute shortage of technical cyber experts in the official sector.
Refining the Digital Personal Data Protection (DPDP) Act: The IMF’s guidance on Data Security and Privacy provides a technical roadmap for Indian financial institutions to implement “need-to-know” access and “least privilege” principles required under the new law.
Gaganyaan & Strategic Defense: As highlighted in concurrent DRDO advancements, the IMF’s “Resilience through Redundancy” principle for data centers mirrors India’s need to protect its own sovereign strategic data.
Follow the full report here: Good Practices in Cyber Risk Regulation and Supervision