Indian arrested for hacking into HSBC's UK accounts

The potential risks of running British banking operations out of Indian call centres were highlighted yesterday after an HSBC employee in Bangalore was arrested for defrauding 16 of the bank's UK customers.

Nadeem Kashmiri, 24, who had worked for HSBC for less than six months, stands accused of selling customer details on to criminals who stole £233,000. It was the first time HSBC's Bangalore call centre, which opened more than four years ago, has been involved in a fraud scandal.

Mr Kashmiri was arrested on Tuesday evening on "hacking" charges, which carry a maximum penalty of three years in prison. He also faces breach of confidentiality charges, which carry a maximum two-year sentence. He is being held at the Cyber Crime Police Station in Bangalore.

HSBC alerted the Indian authorities to the scam earlier this month, but it took several weeks for them to find Mr Kashmiri, who has been on the run. He lied on his CV to get the job. Indian police suspect Mr Kashmiri's accomplices, who used the details he allegedly handed over to pretend to be the account holder and order a money transfer, were based in the UK. The scandal provoked fresh calls for UK companies to bring jobs back home. Amicus, the trade union that has campaigned vociferously against the growing outsourcing trend, said the arrest epitomised the risk of transferring jobs abroad. "If a world player like HSBC is vulnerable to fraud within their overseas call centres, then every organisation outsourcing work is vulnerable," David Fleming, the union's national officer, said.

But HSBC defended its track record in India, adding it had no plans for a strategic U-turn. A spokesman for the bank said the security record of its Indian call centre staff was "second to none", adding that the error rate, at around one in every several hundred thousand transactions was no worse than in the UK. HSBC has paid back all the money to the 16 customers affected.

Instances of call-centre staff defrauding customers are on the rise. In April last year, five staff at a call centre in Pune were arrested for stealing $435,000 (£239,000) from UK customers of Citibank of the US. The case is still under way.

A number of UK banks are seeking to capitalise on antipathy towards talking to Indian call-centre workers by advertising that all their customers' calls are handled in the UK.