mumbai, Aug. 12 -- Cybersecurity is becoming core to financial regulation in India, as the banking and the capital market regulators step up efforts to prepare regulated entities for cyberattacks and fraud. For the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), the focus is increasingly shifting beyond information technology systems and teams to making cyber risk a broader governance and business priority for regulated entities. The two regulators have expanded training and simulation exercises, while preparing for risks linked to newer technologies. At a Financial Institution Benchmarking and Calibration (Fibac) event on Tuesday, RBI governor Sanjay Malhotra cited two key risks to the economy and the banking sector: the uncertainties from geopolitics and trade tariffs and cyber risks. A recent RBI survey had also said banks and non-bank lenders view artificial intelligence (AI)-enabled cyber threats as the biggest risk to their business over the next 12 months. Both regulators said in their annual reports that the focus in the coming year is likely to be testing preparedness and identifying risks before they result in larger disruptions. SEBI is looking at quantum-era risks and technology roadmaps for market infrastructure institutions, while RBI plans to start a micro-data analytics project for cyber risk. It will undertake a thematic review to assess cyber risks emanating from usage of AI tools/systems by supervised entities. It also plans to issue guidelines on 'digital forensic readiness'. Among other measures, RBI said it will undertake a structured mapping of existing sector-specific cybersecurity norms and review them in the light of the upcoming financial sector cybersecurity strategy, the central bank said in its fiscal year 2026 report on 29 May. The measures come as the nature of cyber fraud changes. In its annual report for fiscal year 2026, RBI said the increasing incidence of money mules and the "dynamic" nature of cyber fraud has made it strengthen the regulatory and supervisory framework. There were 10,114 cases of fraud reported by banks and financial institutions in FY26, the report said. Though the number of frauds have fallen in fiscal 2026 from 23,722, the total amount involved rose by 46.4% to Rs.48,021 crore. In July, state-owned Bank of Baroda disclosed a cyber breach that exposed about 1 terrabyte of customer and internal data after an employee's email account was compromised. To help smaller entities deal with such challenges, SEBI introduced the Market Security Operations Centre (M-soc) in FY26, a facility to help smaller regulated entities access cybersecurity services such as detection, monitoring and incident response at a lower cost. National Stock Exchange of India Ltd (NSE) and BSE established M-socs in April 2025 as shared cybersecurity facilities. As of 30 March 2026, 376 market participants had been onboarded across the two M-socs, per SEBI annual report for FY26 released last week. The regulator held four cybersecurity tabletop exercises in FY26 in coordination with Cert-In (Computer Emergency Response Team, the nodal agency for responding to computer security incidents) and under the guidance of the high-powered steering committee on cyber security. During FY26, 36 incidents were reported at SEBI's cyber incident reporting portal for the securities markets, up from 28 last year....