The Royal Bank of Scotland's outsourcing policy has been questioned after it was revealed that a junior technician in India caused a computer meltdown which froze millions of British bank accounts.

Apparently an ‘inexperienced operative’ erased a massive swathe of information during a routine software upgrade for the Royal Bank of Scotland and its subsidiaries NatWest and Ulster Bank. The worker  was part of a team recruited in Hyderabad after the bank laid off more than 20,000 UK staff and outsourced work abroad.

Now it seems that the deleted information had to be painstakingly re-entered into the bank group’s computer system, stalling an estimated 100million transactions. It appears that the the computer operator was carrying out an upgrade to the CA-7 software. As he checked the update, he accidentally erased all the scheduling and took the back up with it.

Stephen Hester, RBS chief executive, defended his company's decision to outsource jobs to India. Bank of England Governor Sir Mervyn King told the Treasury select committee that questions needed to be asked about why the crisis had gone on for so long after the computer failure last Tuesday night, and called on the Financial Services Authority to launch a ‘very detailed investigation’.