Banking shares shrug off debit card security breach concerns; Bank Nifty up 1.4 %

ICICI lead the rally with 4.4% gain followed by Federal Bank, Canara Bank and PNB

Banking stocks have shrugged off concerns rising out of the potential fraud involving nearly 3 million debit cards. At a time when benchmark key indices were up only 0.6 per cent, bank indices are trading firm with a gain of about 1.4 per cent.

ICICI Bank is leading the rally for the third day in a row. Its stock was up 4.4 per cent at Rs 276.7 at IST 1140. It was followed by Federal Bank, Canara Bank, Punjab National Bank - all up between 3.5 per cent and 4 per cent. Interestingly, in the Nifty Bank index, all stocks are trading in the green except HDFC Bank which was marginally down.

It is important to note that around 30 lakh bank debit cards may have come under threat after an alleged security breach at Yes Bank's ATM raised fears of potential fraud. A slew of banks will either replace or ask customer to change the security codes.The move comes a day after India's largest lender State Bank of India said that it had blocked cards of certain customers.

Several reports suggest that the breach is said to have originated in malware introduced in systems of Hitachi Payment Services, which has enabled fraudsters to steal information. Hitachi Payment Services manages the ATM network processing for Yes Bank. Other banks have reportedly been affected because YES Bank ATMs see third-party yransactions too. According to bankers, the breach effected in such a way that anyone using the said bank's ATMs in the region might stand to get affected.

Bankers said the problem was first discovered between May and July, and banks have resorted to recall the affected debit cards from September.

Meanwhile, India's largest bank State Bank of India and its subsidiary banks blocked around 6.25 lakh debit cards after suspicious transactions spiked at third-party ATM machines. Card holders were unaware as their cards were blocked without prior notice. The bank subsequently sent emails and SMSes to customers, alerting them about the blockage.

While State Bank of India said it was re-issuing over 600,000 debit cards because of a potential security breach, several others are taking pre-emptive to thwart any potential troubles. HDFC Bank reportedly asked the customers to change their PINs and has also been asking them not to use any other banks' ATMs as a precautionary measure.