India’s largest securities depository Central Depository Services Limited (CDSL) exposed sensitive data of around 4.39 crore investors, cybersecurity firm CyberX9 reported on November 8.
CDSL is one of the two SEBI-regulated depositories that hold securities like shares, mutual funds, and bonds in electronic format. Nearly 600 stockbrokers who collectively have over 4 crore investor accounts are associated with CDSL.
Although the vulnerabilities that exposed the sensitive data have now been fixed, there are significant ramifications if the data fell into the wrong hands. “We strongly suspect that the data might’ve already been stolen by malicious attackers,” CyberX9 said. “There is a need for a fair security audit of CDSL by the government,” the firm added.
MediaNama has reached out to CDSL for comments and will update this report if we receive a response.
Twice in one month
On October 19, CyberX9 discovered a critical security vulnerability in CDSL and reported the same to the company. The company reportedly took “7 days to fix the vulnerability while an immediate fix could’ve been done in max two hours,” CyberX9 said.
Notwithstanding the delay in fixing the issue, CyberX9 on October 29 “found a laughably easy and complete bypass for the fix that CDSL implemented to patch the earlier reported vulnerability.” The cybersecurity firm reported the same to CDSL the next day and the vulnerability was fixed on November 1.
What personal and financial data were exposed?
CyberX9 reported that the exposed data includes sensitive personal details like:
- Full name
- Complete PAN No
- Gender
- Marital status
- Father/spouse’s full name
- Complete Date of Birth
- Nationality
- Complete residential address
- Complete permanent address
- Contact number(s)
- Email address
- Occupation details.
And financial details like:
- Amount of annual income tax return filed
- net worth (along with the date on which it was updated)
- Demat account number
- Broker name
- CDSL Client ID.
The firm shared redacted screenshots of the exposed data but MediaNama was unable to independently verify the authenticity of the same.
What resulted in the data getting exposed?
The exposed data came from CDSL Ventures (CVL), which is a government-approved KYC registration agency owned by CDSL. An authorization vulnerability in a public KYC application programming interface (API) of CVL resulted in the exposure, CyberX9 said.
“If you invest in stocks, mutual funds, etc. then you should’ve definitely gone through the market securities KYC and there are good chances your KYC was done by CDSL’s CVL since they are one of the major and biggest KYC registration agencies in India,” the firm added.
The cybersecurity firm attributed the incident to a “horribly poor level of cyber security” and “sheer negligence” by CDSL.
The nature of the vulnerability here indicates extreme negligence in handling sensitive personal and financial data of people. And that is not something we expect from the largest Indian depository. They clearly do not stand on what they promise about the security and confidentiality of customer data. – CyberX9
CyberX9 also suggested that there “might be more such critical security issues in CDSL — potentially resulting in people losing access to their holdings in their CDSL Demat account.”
Worked with CERT-In to fix the issue: CyberX9
After struggling and “failing to find any security contact at CDSL,” Cyber X9 reported the vulnerability to the Indian Computer Emergency Response Team (CERT-In) and the National Critical Information Infrastructure Protection Centre (NCIIPC), which are both governmental agencies responsible for dealing with cyber security threats.
Even after reporting to the two agencies, the first vulnerability took more than 7 days for CDSL to fix and the second one took around 3 days, CyberX9 said. Both vulnerabilities could have been fixed in “a maximum of 2 hours”, the firm added.
Between January and June 2021, 30 data breach incidents were reported to CERT-In, the agency revealed in response to an RTI filed by MediaNama last month. Among these are incidents at Pine Labs, Dominoes, Air India, etc., which have compromised the data of millions of Indians over the last year.
Potential consequences if data fell in the wrong hands
CyberX9 outlines to following potential negative consequences if the exposed data fell into the hands of criminals:
- A virtual gold mine for phishers and scammers: The exposed data “could be a virtual gold mine also for phishers and scammers” who can use it to carry out Business Email Compromise (BEC) scams, extortion calls, income tax refund scams, and other scams that involves impersonating banks or government agencies, CyberX9 said. “Armed with such access to CDSL KYC data, phishers and scammers would have an endless supply of compelling scamming templates for calls and emails to use. A database like this would also give fraudsters a constant feed of new investors getting KYC to target them,” CyberX9 added.
- Identity theft: The exposed data could have also been used for identity theft to create fake bank accounts or avail loans, CyberX9 said.
- Disrupting the share market: Malicious attackers can target the exposed investors “to spread misinformation to manipulate Indian share markets” and the data can also be “used by enemy countries to disrupt Indian markets,” CyberX9 reported.
- Compromises other accounts: “People commonly use the type of information been exposed here as their passwords and security questions to services. That’s why it can also lead to people’s social media, emails, and other accounts being hacked by malicious attackers,” including bank and demote accounts, CyberX9 explained.
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