INTERNET BANKING AND LEGAL REMEDIES

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INTRODUCTION

The banking sector in India saw more prominent emphasis being put on innovation and innovation from the 1990s. Banks started to utilize technological innovations to give better administration at a more prominent speed. Internet Banking is getting one of the quickest developing advancements that are assuming a huge part in the day-by-day lives of people. Internet Banking and Mobile Banking made it helpful for clients to do their banking from geologically different places. Banks likewise honed their emphasis on provincial business sectors and presented an assortment of administrations equipped to the uncommon necessities of their rural customers. The Internet is gradually acquiring fame in India. Internet Banking is evolving the financial business and is having significant consequences for banking connections. Web Banking includes conveyance of banking items and administrations. At present, a considerable lot of the banks all throughout the planet have a web presence in a type of ATMs,

Internet Banking, Support administrations, and so on In the realm of banking, the improvement in information technology has a huge impact on the improvement of more adaptable payment modes and more easily used banking services. Electronic Banking  is new and the turn of events and dissemination of these technologies by financial establishments are required to bring about a more productive banking system framework.

WHAT IS INTERNET BANKING ?

Internet Banking, otherwise called net-banking or web based banking, is an electronic payment framework that empowers the client of a bank or a financial establishment to make monetary or non-monetary exchanges online by means of the web or internet services. This assistance gives online admittance to pretty much every financial help, customarily accessible through a neighborhood office including money transfers, deposits, and online bill payments to the clients ,viewing account statements and checking bank balance and so on.in simple words internet banking makes bank transactions using the internet.

internet banking can be used by any person who has enlisted for internet banking at the bank, having a functioning bank account, or any financial organization. Subsequent to enrolling for internet banking offices, a client need not visit the bank each time he/she needs to benefit from every single financial assistance. It’s simplistic and advantageous yet additionally a safe strategy for banking. Net banking portals are secured with unique User/Customer IDs and passwords.

Internet banking also facilitates some unique special features which would benefit all its customers in the form of

Establishing or cancelling recurring payments and standing orders,

Internet banking enables its clients to check their account balance at any time,

It can make bill payments or fund transfers to your friends or others account

It helps us to keep an eye on our mortgages,savings,loans, and investments account linked to our bank,

Through internet banking users could apply for cheque book and also we can buy general insurance.

We can apply for issuance of demand draft ,or demat and IPO services.

Moreover through online banking or internet banking we can make secured and safe payments without knowing to any third eye and we can use these online internet banking portals for our tax payments.

FORMS OF INTERNET BANKING

NATIONAL ELECTRONIC FUND TRANSFER[NEFT]:

National Electronic Funds Transfer (NEFT) is a cross-country payment system interface working with one-to-one fund transfer. Under this Scheme, people, firms, and corporates can electronically move assets or funds from any bank office to any individual, firm or corporate having an account with some other bank office in the nation partaking in the Scheme. People, firms or corporations keeping up accounts with a bank office can move subsidies utilizing NEFT. Indeed, even such people who don’t have a bank account can likewise store cash at the NEFT-empowered branches with directions to transfer funds utilizing NEFT. In any case, such money settlements will be limited to a limit of Rs.50,000/ – per exchange. NEFT, subsequently, works with originators or remitters to start financial movement transactions even without having a bank account. By and by, NEFT works in hourly clusters – there are twelve settlements from 8 am to 7 pm on weekdays and six settlements from 8 am to 1 pm on Saturdays.

REAL-TIME GROSS SETTLEMENT-RTGS] :

RTGS is characterized as the continuous (real-time) settlement of assets or fund transfers independently on an order basis (without netting). ‘real-time’ signifies the preparation of guidelines at the time they are received instead of at some later  ‘gross Settlement’ signifies the settlement of assets or fund transfer directions or instructions happens separately (on guidance by guidance premise). Taking into account that the assets settlement happens in the books of the Reserve Bank of India, the installments or payments are conclusive and permanent. The RTGS framework is essentially implied for enormous worth exchanges. The base add up to be dispatched through RTGS is 2 lakh. There could be no upper roof for RTGS exchanges. The RTGS administration for client’s exchanges is accessible to banks from 9.00 hours to 16.30 hours on weekdays and from 9.00 hours to 14:00 hours on Saturdays for settlement at the RBI end. In any case, the timings that the banks follow may shift contingent upon the client timings of the bank offices.

IMMEDIATE PAYMENT SERVICES[IMPS]:

IMPS gives us an instant, 24X7, interbank electronic asset or fund transfer service through mobile phones. IMPS is a determined tool to transfer cash instantly within banks across India through cell phones, internet and ATM which isn’t just  safe but also economical both in financial and non-financial perspectives. 

OBJECTIVES OF IMPS:

The objectives of imps is to make payments simple by just using mobile phone number of the beneficiary

To facilitate mobile payment systems already introduced in India with the Reserve Bank of India Mobile Payment Guidelines 2008 to be interoperable across banks and mobile operators in a safe and secured manner

To build the foundation for a full range of mobile based Banking services

To enable bank customers to use mobile instruments as a channel for accessing their banks accounts and remit funds

ELECTRONIC CLEARING SYSTEM[ECS]:

ECS is an elective technique for affecting payment exchanges in regard of the utility-bill-payments, for example, phone bills power charges, insurance premia, card installments, and credit reimbursements, and so on, which would forestall the requirement for giving and dealing with paper instruments and in this manner work with improved client assistance by banks/organizations/enterprises/government offices, and so forth, collecting/receiving the payments.

UNIFIED PAYMENT INTERFACE[UPI]: is an instantaneous real-time online payment system that allows instant transfer of funds from one bank account to another. This system is capable of handling transactions from different bank accounts through a single mobile application.The difference between UPI and Internet Banking is that UPI is mainly used to transfer funds (both peer to peer and merchant payments) using the various mobile applications offering this service. Whereas, Internet Banking offers fund-transfer services along with other banking options like loan applications, credit card applications, and opening of fixed deposit accounts

ADVANTAGES OF INTERNET BANKING:

1.internet banking can be easily accessible by any person.

2.Through internet banking anyone can pay their bills and transfer their money   without any problem.This could avoid long queues in banks and transaction details can be viewed without any hassle and as many times.

3.The internet banking is accessible whenever in light of the fact that it is open 24 hours. Individuals can get to their record from a place at the evening time and occasions moreover.

4.The net banking is quick and productive and individuals don’t need to sit around idly and can handle several accounts by themselves.

5.through web banking people can watch their transactions and account balance whenever they feel the need is there this could help to secure their money.

6.Through internet banking bank can support their plans and administrations to individuals and individuals can mindful of the new administrations

7.the cost of operation per unit of services is lower for banks.

8.it is a great medium for banks to endorse their products and services.

DISADVANTAGES OF INTERNET BANKING:

1.Though the internet banking is not difficult to deal with by broad individuals yet individuals who don’t have the foggiest idea about how to utilize the web, it very well may be hard to run them. A few banks give demos to the amateurs yet not every one of the banks.

2.For web based financial transactions individuals should have a web association for access to the record. Without the web or internet services people cannot access it.

3.while executing the cash starting with one record then onto the next account the security is an enormous issue, some of the time the data may get hacked by unapproved individuals.in net banking password security is necessary without that account cannot be misused.

4.when the bank servers are down users cannot use his account.In some cases it is hard to know whether the exchanges are done effectively or not because of the loss of the net administrations. Individuals need to stay in the condition of uncertainty which is helpful and which isn’t advantageous.

5.there are certain qualifications which people need to reach without the required qualifications one cannot access the internet banking services.

6.we might get annoyed by continuous emails and advertisements.

COMMON INTERNET BANKING FRAUDS:

The following are some common types of internet banking frauds occurring in our daily lives.

Most of these frauds happen to innocent  customers or customers who are poor in using internet banking services and they easily believe and rely on banks and their personnel.

These frauds are mostly performed by the internet.

HACKING: Hacking incorporates acquiring unlawful passage into a PC framework. These days, the hacking of IP addresses is exceptionally all inclusive as it allows the programmers to envision a phony online character and complete illicit dealings

restrictive of utilizing his genuine singularity.

IDENTITY THEFT: countless fraud wrongdoings happen over the web. Hoodlums can get a grip of your own data through your PC and afterward set up counterfeit bank accounts or take out advances or loans in your name.

PHISHING:in this type of frauds fraudsters ask to provide all personal information about you and your bank account acting as bankers and by floating a site similar to that of your bank on the pretext of database upgradation.the number and privacy passcode are then used to carry out transactions on your behalf without your knowledge.

Phishing includes utilizing a type of spam to deceitfully access individuals’ internet banking subtleties. Just as focusing on internet banking clients, phishing messages may target online sale locales or other online installment offices. Ordinarily, a phishing email will ask an internet banking client to follow a connection to refresh individual financial balance subtleties. In the event that the connection is followed, the casualty downloads a program which catches their banking login subtleties and sends them to an outsider.

Site cloning is the duplication of a site for criminal use. Regularly sites cloning will

appear as realized visit rooms or exchange destinations so that individuals will either unconsciously offer data to the lawbreaker or make a “phony” buy, enthusiastically giving cash for an item that doesn’t really exist.

SPAM:Spam is an electronic ‘junk mail’ or unnecessary messages sent to your email record or smartphone. These messages are different, however they are basically business related and constantly annoying in their sheer volume. They may

attempt to convince you to purchase an item or administration, or visit a site where you can make purchases or they may endeavor to fool you into disclosing your bank account details or your other financial related details.

SPYWARE:Spyware, for example, Trojan Horse is by and large viewed as programming that is subtly introduced on a PC and takes things from it without the authorization or information of the client. Spyware may take individual data, business data, transfer speed; or prepare a limit and furtively offers it to another person. “Trojan horse” plot unfurls when noxious programming (malware) implants to a shopper’s PC without the user monitoring it. Trojans frequently come in joins or as connections from obscure email senders. After establishment the product identifies when an individual gets to internet banking destinations furthermore, records the username and password to send to the fraudsters.

TAX SCAMS:This kind of fraud typically happens during the tax season when citizens will be sitting tight for their tax refund or discount. Fraudsters send fraud discount SMS and messages to citizens professing to be from the income tax office. These messages are fundamentally  intended for gathering their own data like login details of I-T Department site, bank account details, etc. To credit the refunded amount to your bank, you will be approached to give your sensitive bank data.

ONLINE SHOPPING FRAUDS: It is one of the greatest web frauds since the previous few years. Under this, fraudsters set up fake internet shopping sites determined to swindle innocent individuals of their well deserved cash. On the site, they show alluring products at a modest rate. Be that as it may, after the purchase is made by paying the cash, either the phony item is conveyed or the item isn’t conveyed in any way. These sites won’t have any return or refund approaches and furthermore there will be no client service group to contact.

OLX FRAUDS:Frauds on OLX have become exceptionally normal and numerous individuals have lost their cash while purchasing and selling items on the site. The extortion which typically happens on OLX is, fraudsters act like Army work force and post their fake i’d which represents them as army personnel . Fraudsters utilize the stolen Id card of armed force staff also to make individuals trust them. They gather cash from the purchaser for the publicized item however they won’t ever convey the item. Here generosity related to the military is utilized by fraudsters to swindle individuals of their well deserved cash and also not only by misrepresentations many types of scams happen in olx websites especially who are not aware of what kind of details are to be shared and what are not be shared.

WORK FROM HOME SCAMS: Work from home trick is one of the genuine web misrepresentations. Under this, fraudsters trick individuals who are searching for work from home job openings by promising that they will bring in attractive cash, just by laboring for a couple of hours from home. To enroll for the plan, work searchers will be approached to transfer a specific amount of cash for a work package which is helpful for the work. After the cash is kept, there will be no track of managers and their job details.

CREDIT CARD REWARD POINTS FRAUD: Reward points are offered by the credit card organizations to enhance the utilization of credit cards. scams likewise occurred for the sake of credit card reward points. Fraudsters call credit cardholders acting to be from their credit card organization and reveal to them that they would help them in reclaiming their credit card reward point. They make earnestness among cardholders expressing that the offer will end very soon. To recover the reward points, cardholders will be approached to furnish their card details alongside OTP. Fraudsters do fraudulent  exchanges utilizing these details.

LOTTERY FRAUD: Lottery fraud is one among the best three web fakes in India. Most of us have experienced such messages forwarded to us .Under lottery misrepresentation, fraudsters call you or send messages and messages expressing you have won a lottery worth rupees some crore. To get the lottery cash, you will be approached to transfer cash online for the sake of tax. Now when you approach there to pay cash by visiting counterfeit sites. At the point when you attempt to make an installment utilizing those sites, all your card details will be taken.

LEGISLATIVE FRAMEWORK:

The indian banking sector is regulated by the Reserve Bank of India Act 1934[RBI ACT] and the Banking Regulation Act 1949[BR ACT],In addition, the Foreign Exchange Management Act 1999[FEMA ACT] regulates cross-border exchange by indian entities,including banks.

Internet Banking certifiably not a different business it is banking utilizing E-channels.banking is managed by RBI under the RBI Act subject to authorizing law with respect to electronic reports is contained in the Information Technology Act 2002 as corrected by the Information Technology Act 2008.There are different arrangements of law,which are pertinent to customary financial exercises and are additionally appropriate to  internet banking.and there are various legislations in india which one way or the other prevent the internet banking frauds.

INFORMATION TECHNOLOGY ACT,2000

Law cannot probably be expected to stay pace with changes in technology.

The Indian Information Technology Act, 2000, essentially a system law, makes hacking a culpable offense underneath Section 66. Break of information security is certainly perceived as a reformatory offense inside the sort of hacking. The suitable government (focal/state) is approved to proclaim any ‘computer’, ‘computer framework’, or ‘computer network’ as an ensured framework. A 10-year time and a weighty fine expect someone World Health Organization ties down admittance to the ‘got computer framework’ in debate of the arrangements of the law.

The IT Act has corrected Section 354 D and Section 446 of the Indian Penal Code and Section 67A and Section 73-An of the Indian Evidence Act, 1872. The IT Act has incorporated all electro-attractive information stockpiling gadgets in the Bankers Books Evidence Act, 1891, so all electronic information put away in such gadgets can be submitted as proof to an official courtroom. It has additionally enabled the Central Board, that has been established by the Reserve Bank of India, to direct support moves through electronic methods given by banks or other monetary foundations, in light of The Reserve Bank of India Act, 1934.

there are many net banking frauds in india as discussed above like spam,spyware,phishing,to counter such frauds in india IT act was enacted and amended by time to time.this act provides the solution for these problems

Under IT Act one can file an application before an arbitrating official named under area 46 of the IT Act by the union govt., asserting the penetrate of sensible security by any corporate or monetary institution. According to section 43A of IT Act,2000 gives that any, body corporate or monetary institutions(which incorporates bank) who have neglected to keep up the sensible security strategies should pay damages or remuneration to such individual to cover the losses. Here the bank should need to demonstrate that they have kept up reasonable security to forestall the deceitful demonstrations.

Again under section 72A of Information Technology Act, 2000,(amendment of 2008)”disclosure of data, purposely and purposefully, without the assent of the individual concerned and in breach of the legal agreement has been additionally made punishable with detainment for a term stretching out to three years and fine reaching out to INR 5,00,000 (Approx. US$ 10750)”

Again some of the provisions related with the offenses and punishments by means of electronic medium. They are pretty much related to the e-banking framework.like:

Section 66-B talks about punishment for dishonestly receiving stolen computer resources or communication device-Whoever dishonestly receives or retains any stolen computer resource or communication device knowing or having reason to believe the same to be stolen computer resource or communication device, shall be punished with imprisonment of either description for a term which may extend to three years or with fine which may extend to rupees one lakh or with both.

Section 66-C punishment for identity theft- Whoever, fraudulently or dishonestly make use of the electronic signature, password or any other unique identification feature of any other person, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine with may extend to rupees one lakh.

Section 66-D punishment for cheating by personation by using computer resources- Whoever, by means for any communication device or computer resource cheats by personation, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine which may extend to one lakh rupees.

Section 66-E punishment for violation of privacy- Whoever, intentionally or knowingly captures, publishes or transmits the image of a private area of any person without his or her consent, under circumstances violating the privacy of that person, shall be punished with imprisonment which may extend to three years or with fine not exceeding two lakh rupees, or with both.

Section 85 -offences by companies-1. Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this subsection shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

2. Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

Besides the digital signature which is legitimized by the IT Act 2000,is a significant segment in Internet Banking.

This is the means by which the IT Act, 2000 is connected with the e banking sector  and gives a lawful system in such a manner.

INDIAN PENAL CODE,1860

With the changing necessities of the general public laws are intended to be changed. In the advanced period with the development of science and innovation, the rate of digital frauds are likewise developing. Thus to manage the different wrongdoings managing the online administrations (additionally including e banking) the mother criminal law for example IPC has gone through different changes. A portion of the correction of IPC which is connected with E banking and electronic records are referenced underneath.

Section 463-FORGERY- Whoever makes any false documents or false electronic record or part of a document or electronic record, with intent to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, commits forgery.

Section 463 of IPC deals with forgery. The words of section 463 “Whoever makes any false documents or part of a document with intent to cause damage or injury”[26], substituted with the words “Whoever makes any false documents or false electronic record or party of a document or electronic record, with intent to cause damage or injury” Thus the word electronic record has been included the meaning of forgery and if any individual makes false document or false electronic record to make harm some other individual or public or his property with the goal to submit misrepresentation then he is called to commit forgery.

Section 464 – Making a false document.  A person is said to make a false document or false electronic record-

 First -Who dishonestly or fraudulently-

a. makes, signs, seals or executes a document or part of a document;

b. makes or transmits any electronic record or part of any electronic record;

c. affixes any [electronic signature] on any electronic record;

d. makes any mark denoting the execution of a document or the authenticity of the

[electronic signature],with the intention of causing it to be believed that such document or part of document, electronic record or [electronic signature] was made, signed, sealed, executed, transmitted or affixed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed, executed or affixed; or

 Secondly -Who, without lawful authority, dishonestly or fraudu­lently, by cancellation or otherwise, alters a document or an electronic record in any material part thereof, after it has been made, executed or affixed with [electronic signature] either by himself or by any other person, whether such person be living or dead at the time of such alteration; or

Thirdly -Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document or an electronic record or to affix his [electronic signature] on any electronic record knowing that such person by reason of unsoundness of mind or intoxication cannot, or that by reason of deception practised upon him, he does not know the contents of the document or electronic record or the nature of the alteration.

Again section 464 of IPC deals with the provision for making false documents. In this section also electronic signature is added by the Information Technology (Amendment) Act, 2008.  Under this section various circumstances were added which are related with the banking laws also. A person is said to make a false document or false electronic record if he fraudulently or dishonestly makes or transmits an electronic record or part of any electronic record or if he fraudulently affixes any electronic signature. Again if he dishonestly signs, seals or executes, alters any document or electronic record or affix and electronic signature by taking advantage of his unsoundness, intoxication; then he is said to make false documents. This provision is related to the e-banking procedures.

Section 403-dishonest misappropriation of property-Whoever dishonestly mis-appropriates or converts to his own use any movable property, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or both

Just like other enactments our indian evidence act,1872 has gone through different changes with the advent of information technology act like section 3 of the act defines evidence. The words of section 3  changed to “all the documents produced before the court including the electronic records for the inspection of the court; such statements are called documentary evidence.”Here, it means if any documents produced before the court which is in electronic format; for the examination of the court, then that statements are also regard as documentary evidence.  Again under section 17 the change was made as ‘admissions can be made in oral or documentary or in electronic forms’.

In section 34 of the act stated as-[Entries in books of account including those maintained in an electronic form] when relevant-[Entries in books of accounts including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.

Section 47 A- opinion as to electronic signature when relevant-When the Court has to form an opinion as to the [electronic signature] of any person, the opinion of the Certifying Authority which has issued the [Electronic Signature Certificate] is a relevant fact.]And section 65-B talks about admissibility of electronic records.

CONCLUSION:

Despite the fact that it requires some time to set up an internet banking sector as a legitimate banking industry in India, however it works easily to lessen the issues that typically occurred while embracing the conventional paper-based exchanges. With the different benefits, the internet banking sector catches a portion of the detriments.

One of them is the absence of proper enactment to regulate the internet banking sector in India. but still, There are different enactments in India managing the financial sectors of India. Among them, there are not very many enactments that notice the internet banking structure. The Banking Regulation Act, which is one of the significant enactments in connection banking law, is quiet as far as internet or e-banking sectors. The IT Act, 2000 which is related to cyber laws of India, is more relevant to apply for the internet banking industry. The frauds relating to internet banking commonly managed by IT Act,2000 and IPC,1860. A few arrangements of IPC were altered by this IT Act,2000 for managing violations and crimes relating to the electronic medium.

The authorization of an appropriate enactment comparable to internet banking will be the best answer for this internet banking fraud. As the number of internet banking extortion is expanding step by step, it is time where the assembly ought to be mindful of this issue and show their awareness by outlining a compelling enactment. Also, the client’s mindfulness and caution are generally significant here.

And in my view the best possible way to prevent theses internet banking frauds is that users and customers of theses internet banking should be self aware of these frauds  and banks should educate and spread awareness to their customers about  how to use internet banking services without any issues in the meanwhile our government should enact a legislation which will specially deal with internet banking

Additionally, it is the duty of the government. likewise to step up to the plate for the advancement of the internet banking sector as it is quite possibly the most solid wellsprings of a nation’s economy. An aggregate exertion of the banks, clients, and the govt. altogether ought to need to take appropriate drives for eliminating the internet frauds from the Indian financial industry.

Author: K.leela manikantha royal, ICFAI UNIVERSITY HYDERABAD

Editor: Kanishka VaishSenior Editor, LexLife India.

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