The National Payment Corporation of India (NPCI), a governing body that supervises payment systems, released a public announcement on Wednesday stating that it had temporarily restricted access to the retail payments system operated by NPCI for C-Edge Technologies.

According to two sources familiar with the situation, a ransomware attack on a technology service provider has temporarily shut down payment systems across almost 300 small Indian local banks.

This attack impacted C-Edge Technologies, which provides banking technology systems to small banks nationwide.

Ransomware refers to crypto virological malware that restricts access to the victim’s data until a “ransom” is paid. Some basic ransomware may lock the system without harming files, while more sophisticated malware employs cryptoviral extortion to achieve its goals.

C-Edge Technologies did not reply to an email seeking comment, and the Reserve Bank of India, the country’s banking and payment system regulator, did not respond to Reuters’ request for comment.

NPCI mentioned that customers of banks serviced by C-Edge will be unable to access payment systems during the isolation period.

According to sources, officials at a regulatory authority have disconnected nearly 300 small banks from the broader payment network in the country to prevent any wider impact.

One source noted, “Most of these are small banks, and only about 0.5% of the country’s payment system volumes would be impacted.”

India has nearly 1,500 cooperative and regional banks, most of which operate outside major cities. As indicated by the sources, some of these banks have been affected.

The second source reported that NPCI is conducting an audit to ensure the attack does not spread.

Furthermore, banking industry sources, including the first source, disclosed that the RBI and the Indian cyber authorities had cautioned Indian banks about potential cyber-attacks in the past few weeks.

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