Bank of Baroda is preparing to increase its technology and cybersecurity spending beyond its traditional budgetary ceiling of 10% of operating profit following a breach involving an employee email account in July 2026. The incident has prompted the state-owned lender to reassess its digital infrastructure, employee security practices and internal safeguards.
Managing Director and Chief Executive Officer Debadatta Chand said the breach marked an important turning point for the bank, leading to a broader review of its cybersecurity arrangements. The final financial commitment is expected to become clearer after December 2026.
The bank indicated that technology allocations during FY2026-27 would exceed the previous 10% limit through a combination of capital expenditure and operational spending. Some investments could also extend into the following financial year.
Employee Awareness and Digital Security Controls Under Review
The July email breach highlighted the importance of addressing human-related security risks alongside technical protections. Bank of Baroda is therefore placing greater emphasis on employee awareness, access management and stricter internal procedures.
Staff training programmes are being strengthened to help employees recognise phishing attempts, avoid suspicious links and handle sensitive information securely. The bank is also upgrading legacy software and reinforcing internal controls to improve the resilience of its digital systems.
Additional measures include multi-level identity verification and stricter security filters before employees can access internal platforms. These controls are intended to reduce the possibility of unauthorised access to sensitive systems.
The lender has also engaged an external consultant to review its cybersecurity arrangements and recommend improvements in line with international standards. It is coordinating with relevant government agencies, including the Indian Computer Emergency Response Team (CERT-In), as part of its broader security response.
The bank's planned spending increase reflects a wider focus on protecting digital banking infrastructure as financial institutions face evolving cybersecurity risks.
Agricultural Loan Slippages and El Niño Concerns
Alongside its technology investments, Bank of Baroda is monitoring asset quality, particularly in its agricultural lending portfolio.
The bank recorded fresh agricultural loan slippages of approximately ₹840 crore. According to Chand, these were not directly linked to adverse weather conditions.
However, management intends to monitor the possible impact of El Niño on agricultural borrowers and loan repayments from the December quarter onwards. Weather-related pressures could affect farm incomes and repayment capacity, making rural credit quality an important area of attention.
Despite the agricultural slippages, the bank reported improvements in gross non-performing assets (GNPA) across its major credit segments during the latest quarter compared with the preceding quarter.
Management plans to continue focusing on loan recoveries, particularly in rural portfolios, to maintain the improvement in asset quality.
Insurance Subsidiary Stake Sale Remains an Option
Bank of Baroda is also reviewing its capital strategy and potential opportunities involving its life insurance subsidiary.
A partial divestment remains under consideration, but the management intends to wait for at least a year of operational improvement before reassessing the business's valuation and deciding whether to sell a stake.
In the meantime, the lender is prioritising the recovery of amounts from previously written-off loans. Successful recoveries could result in provision write-backs, helping strengthen the bank's financial buffers.
These measures are part of its preparations for upcoming changes in banking regulations and provisioning requirements.
Expected Credit Loss Framework to Begin in April 2027
Another major priority for the bank is preparing for the Expected Credit Loss (ECL) provisioning framework, scheduled for implementation from April 1, 2027.
Under the ECL approach, banks are required to estimate and recognise potential credit losses in advance rather than relying primarily on the traditional model of recognising provisions after loan deterioration becomes evident.
The transition will require financial institutions to strengthen their credit-risk assessment systems, forecasting capabilities and provisioning processes.
For Bank of Baroda, the combination of higher technology expenditure, improved loan recoveries and preparation for the ECL framework forms part of a broader effort to strengthen operational resilience and financial risk management.
The planned cybersecurity investment also demonstrates how digital security is becoming an increasingly important component of banking operations. Financial institutions must assess not only their technology infrastructure but also employee practices, access controls and internal monitoring systems. Businesses seeking stronger financial controls and risk oversight can explore Shunyatax's internal audit services.