Internet Banking and Indian Laws

Internet banking is a facility that allows a person to access his bank accounts from anywhere, using the Internet. While it offers the benefits of fast transactions, reduced costs and anytime, anywhere facilities, it is also prone to certain hazards. For instance, Internet banking leaves an account holder vulnerable to hacking of personal information.

The misuse of Internet amounts to cyber crime, and India too has been witnessing a sharp increase in cyber crimes in the recent years. The Cyber Law of India, provided in the Information Technology Act, 2000, is, however, silent on prevailing problems such as Phishing.

Internet Banking Problems and Legal Remedies

A major problem for banks and Internet banking users, Phishing is an art of tricking someone into giving confidential information and fraudulently acquiring their sensitive information like passwords and credit card details. The IT Act 2000, however, does not specifically define phishing as an offence and thus the law enforcement authorities have to take recourse to the generic provisions of cheating and criminal breach of trust under the Indian Penal Code. 

Due to the lack of adequate legal provisions for dealing with growing cyber crimes, banks are working towards intimating net users about e-security. SMS alerts are used to inform customers promptly about their online transactions. Banks have also put in place security measures, as outlined by the Reserve Bank of India in its guidelines for Internet banking. The guidelines talk about the risks associated with Internet banking, technology and security standards, legal issues involved, and regulatory and supervisory concerns. The RBI is empowered to audit the compliance of the Internet banking policy outlined by it.

Internet Banking in India

Nearly all banks operating in India offer Internet banking services, wherein every customer is given a unique user name and password. Customers can use these details to log on to their accounts to carry out any transaction. The bank keeps a record of all online transactions of a customer.

Although most banks claim to have a multi-layered security architecture comprising firewalls, filtering routers, encryption and digital certification to protect unauthorized access to their customer accounts, hacking has become a major problem.

Precautions for Internet Banking Users

Here are some precautions to follow while Internet banking to avoid misuse of their accounts:

• One should log out from a bank’s website using the set procedure especially while working on a public computer or over a non secured wireless connection.
• Keep changing the password at regular intervals.
• Try to memorize the username and password for your Internet account instead of writing it.
• Never furnish any sensitive information through an email claiming to be from a bank and never go to any hyperlink directed from a site and give any sensitive information.

The growing fraud in Internet banking can be checked if the regulatory agencies like the Reserve Bank of India, service providers such as banks and ISPs, and customers themselves are more alert. Laws have to be made stricter to ensure that banks comply with implementing the necessary security systems and there is a need for stricter punishment for people committing cyber crimes.