Banking is the development motor of the economy in any country. It provides private organization, government as well as a common man with various facilities that cannot be overseen while talking about the development of a country. With the advancement of technologies and scientific growth in every sector, India has witnessed tremendous growth and banking has taken the help of information technology to boost their sector.
The introduction of Internet banking or E-banking has opened a whole new way for a person to access the facilities of a bank. It offers traditional banking services virtually as well as various other facilities like payment for online shopping, with providing facilities at even non-banking hours and on holidays. It has proved out to be a cost and time-efficient process also, because it reduces the time of going to a bank, standing there in a long queue and is also a less complicated process because the person has to follow steps given on the website and not go on from one bank official to another, which is what usually happens in a bank.
Although it has many advantages like it is more convenient, provides unlimited mobility, and also environment friendly, the disadvantages cannot be ignored. The biggest disadvantage of e-banking service is improper security services. Although the software is designed in a way to provide maximum security and privacy, illegal activities like hacking, phishing, identity thefts, and others are common problems faced by people who rely on e-banking. Trust is a big factor that comes into picture when a person decides to engage in e-banking, due to cases of frauds and hacking, people tend to avoid using e-banking services.
Few challenges that the law agency face with relation to internet banking services are, absence of formal technical knowledge on how to deal with internet fraud cases, establishing a chain of evidence is difficult, lack of visible evidence to start with, lack of cyber forensic knowledge and also no knowledge on how to set up the action plan for investigation. In frauds associated with debit cards, credit cards, and net banking, Rs. 129 crore has been lost in just 3 months as of December 2019. A total range of 21,041 such instances have been registered in these three months, Anurag Thakur, MoS, Ministry of Finance stated in a reply to a question in Lok Sabha.
Despite there being various international and national laws regarding e-banking there is still a lack of smooth functioning of e-banking. Specifically, in terms of the jurisdiction where international transactions take place. From the legal perspective, the privacy procedure laid down by banks for providing access to internet banking needs to be recognized by law.
The present legal system doesn’t set out the boundaries with regards to the degree to which an individual can be bound regarding electronic guidance indicated to have been given by him. For the most part, confirmation is accomplished by a security system, which includes techniques and gadgets like client id, secret phrase, and individual distinguishing proof number (PIN), code numbers and encryption, and so on, used to build up the validity of methods for authentication. In any case, from a lawful point of view, a security method should be perceived by law as a substitute for signature.
In India, the Information Technology Act, 2000, in Section 3(2) accommodates a specific innovation (viz., the lopsided crypto framework and hash work) as a method for verifying electronic records. This has raised the uncertainty about whether the law would perceive the current techniques used by banks as legitimate strategies for verification.
Under the current system, there is a commitment on banks to keep the client’s record classified and secured, In the Internet banking situation, the danger of banks not meeting the above commitment is high under a few elements like clients not being cautious about their passwords, PIN and other individual distinguishing proof subtleties and uncovering the equivalent to other people, banks’ locales being hacked in spite all things considered and data got to by unintentional discoverers.
Banks offering Internet banking are taking all sensible safety efforts like SSL, 128 piece encryption, firewalls, and other net security gadgets, and so on, but even after the efforts of the banks, they should, look up for better measures to oversee such risks.
The banks giving Internet banking administration and clients profiting of the equivalent are at present going into agreements with the customer, comprising with the individual rights and liabilities concerning e-banking exchanges, but there is no standard format of the same. A standard arrangement necessity to be embraced by banks might be structured by the Indian Banks’ Association, which should catch every single basic condition to be satisfied by the banks, the clients, and relative rights and liabilities emerging therefrom. This will help in normalizing documentation as likewise create standard practice among brokers offering Internet banking office.
Another concern is that of Internet banking exchanges turning into a channel for tax evasion. Such exchanges are started and closed between assigned records. Further, the proposed Prevention of Money Laundering Bill 1999 forces commitment on each financial organization to keep up records of exchanges for a certain recommended period.
The Banking Companies (Period of Preservation of Records) Rules, 1985 likewise expect banks to protect certain records for a period going between 5 to 8 years. So there should be legitimate arrangements which are material to all financial exchanges, regardless of whether Internet banking or conventional banking, which will satisfactorily deal with this.
The Consumer Protection Act, 1986 characterizes the rights of buyers and applies to bank benefits too. As of now, the rights and liabilities of clients profiting of Internet banking administrations are being dictated by mutual understanding through bilateral agreements between the banks and clients. It is open for discussion that whether any reciprocal understanding characterizing clients’ privileges and liabilities, which is delighted in by them in the conventional financial situation will be lawfully legitimate. Considering the financial practice and rights appreciated by clients in conventional banking, it shows up the banks giving e-banking facilities may not clear themselves from risk to the clients because of unauthorized practices like hacking.
Despite the fact that The Information Technology Act, 2000 has accommodated a punishment for refusal of access to a PC framework (Section-43) and hacking (Section – 66), the obligation of banks in such circumstances isn’t clear. The Information Technology Act, 2000, in Section 72 has laid down punishments for the reprieve of security and protection. Along these lines, the danger of banks infiltrating insurance when data is experiencing the framework isn’t clear. This angle needs a legitimate evaluation.
This blog is written by Amrit Rathi, Jindal Global Law School
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