E-Banking refers to the practise of conducting financial transactions over the
internet, such as seeing and verifying account activity, examining account
balances, printing statements, and keeping tabs on non-credit and unpaid checks.
Clients can take advantage of a wide range of services, all available through
their online banking platform. They offer a wide range of financial services,
including checking, savings, and more.
On the other hand, traditional finance
generates income through the use of a distributed computing network to hold
capital in dynamically updated local databases. Contrarily, the Internet
generates revenue by tapping into the company's central, automatically updated
database. Ideally, we'd like the banking system to provide more options that
bring customers into closer contact with the bank's dayto-day operations while
also facilitating the consolidation of back-office processes among financial
The "clan" of banks benefits greatly from the provision of such
facilities as an alternative to banking. With the increasing internationalisation of the Indian economy came the imperative to provide our
customers with internet banking services at par with the best in the world.
Banks are successful because customers typically conduct business while relaxing
at home. Individuals have access to banking services, including the ability to
conduct transactions at any time of day, that they may not have had before.
Using the Internet, we are able to do things like move money between accounts,
pay bills online by submitting checks, view and print out account statements,
and even request a cheque book from the comfort of our own homes. Because of
recent progress and the expectation of financial and economic success,
electronic banking is widely regarded and encouraged worldwide. Additionally,
bankers insist that their industry is even more crucial than the Industrial
Electronic cigarettes (e-cigarettes) are becoming increasingly
common as a result of the many positive effects they have on users. Many
well-known websites have grown thanks to the rise of online shopping, including
eBay, Yahoo, Dell, and Amazon. One well-known financial institution has also
joined the social networking bandwagon.
The Legal Structure around e-banking in India
In India, online banking has become widely accepted and utilized, with the 1990s
witnessing the emergence of banking services that eliminated the need for
physical branches. ICICI Bank was the first Indian financial institution to
offer online banking, followed by HDFC and Citibank. In 1999, banks started
providing online banking services. To safeguard electronic transactions and
e-commerce, the IT Act of 2000 was passed, providing legal protection from
October 17, 2000.
The Reserve Bank of India (RBI) constantly monitors and reviews legislative and
other requirements related to e-banking to ensure its rational growth and avoid
threats to financial stability. By January 2016, India had 196,079 automated
teller machines and 1,337,310 point-of-sale terminals. Commercial banks in India
have embraced e-banking and other measures to cope with increasing competition,
particularly from newly established private and foreign banks.
Indian banks offer a diverse range of electronic banking services, including
ATMs, Internet Banking, Mobile Banking, Phone Banking, Tele Banking, Electronic
Clearing Services, Electronic Clearing Cards, Smart Cards, Door Step Banking,
and Electronic Money Transfer. According to RBI's Annual Report 2020-21, the
number of transactions processed by payment systems increased by 26.2%,
following a 44.2% increase the previous year.
The POS terminal market is divided between private and public banks, with a
67%-33% split. Payments banks hold a 5% market share, while international banks
account for 1%. As of March 2021, there were 960.25 million cards in use,
including 898.20 million debit cards and 62.05 million credit cards, with
year-over-year increases of 8% and 7%, respectively. The total number of prepaid
payment instruments reached 2.20 billion, with prepaid cards at 189.93 million
and mobile wallets nearly 2.01 billion.
During the first quarter of 2021, mobile wallets facilitated 1.13 billion
transactions worth INR 411.75 billion, while Net Banking/Internet browsers
processed over 937.60 million transactions. Mobile transactions accounted for
INR 31.98 trillion, while online purchases totaled INR 131.34 trillion. Within
UPI transactions, Person to Person (P2P) accounted for 55% of volume, while
Person to Merchant (P2M) transactions accounted for 45%. The total UPI
transactions exceeded 2.73 billion, valued at over 5 trillion Indian Rupees.
The Bharat Bill Payment Central Unit (BBPCU) processed 90.71 million payments in
the first quarter of 2021, with a total value of INR 134.70 billion,
representing a significant increase compared to Q1 2020. AePS (Aadhaar-enabled
Payment System) facilitated over 449.45 million transactions in Q1 2021, showing
an almost 120% increase compared to Q1 2020, with transactions totaling INR
633.38 billion, a 93% rise from Q1 2010.
RBI Provisions on minimum standards for e-Banking
The Ministry of Information Technology used the powers granted to it by the
Information Technology Act, 2000 on October 17, 2000, when it issued a
notification. The following are the minimum standards of security set by the
RBI, which were established pursuant to this notice by the Reserve Bank of India
(hereinafter referred to as "RBI") in a notification dated 14.06.2001 and by an
amendment to that notification dated 20.07.2005, where the need for the approval
of RBI was scrapped off:
Digital signatures based on a Security Sockets Layer encryption standard with a
bit length of 128 are used for rigorous authentication. Among other things, the
Board of Directors must approve the bank's security policy, which the Security
Officer will implement in order to ensure compliance with the standards
established by the IT Act.
At the time, concepts like login id, password, and biometric verification were
novel; consequently, banks were tasked with adopting these novel ideas by
implementing measures to ensure the security and privacy of their customers'
online and digital banking transactions, such as by using a proxy server to
prevent unauthorised access. It was determined that it was essential to upgrade,
fix bugs, and install other security software before any Internet Banking
service could be made available to the public.
E-banking security holes must be disclosed and patched as soon as feasible, and
future policy decisions should be made with security holes in mind. Meanwhile,
it's the bank's responsibility to maintain track of every e-transaction and
message sent and received, in both encoded and decoded form.
Information Technology Act
Although the Banking Regulation Act of 1949 and the Reserve Bank of India Act of
1934 lay the legal groundwork for electronic banking, the IT Act governs all
forms of cybercrime and electronic payment related systems.
All contracts and electronic transactions are valid and enforceable under the IT
Act, as the purpose of the legislation was to facilitate e-commerce and
governance. As such, the bank is required to keep and analyse all electronic
papers and digital signatures in accordance with the IT Act.
As the theft of data through unethical means, such as hacking, the development,
and the propagation of viruses, is illegal under the requirements of the IT Act,
no e-banking transaction may survive if it is not in line with the provisions of
the IT Act. The Act also protects ISPs and intermediaries from legal action
regarding illicit content on their networks.
This Act protects the security and privacy of electronic transactions, including
sign-in, password typing, and other confidential information, and makes any
violation thereof punishable. In exchange for this protection, the Bank
(intermediary) is obligated to keep records and preserve them as directed by the
Central Government from time to time.
Indian Penal Code
- Section 66-B of the IT Act prohibits the illegal receipt of stolen data
or information from any technological computer-based device, which overlaps
with the provisions of Section 411 of the Indian Penal Code (IPC). Consequently, both
laws make it unlawful and punishable to engage in activities related to stolen
data, including hacking, creating infection vectors, or spreading viruses.
However, it is worth noting that while Section 378 and Section 424 of the IPC
also address data theft and its facilitation, the IT Act does not have an
equivalent penalty for the creation or use of forged electronic documents under
Section 468 of the IPC.
- Section 66-C of the IT Act deals with the offense of "cheating by
impersonation," which bears resemblance to the concept of "dishonestly
receiving stolen property" in Section 411 of the Indian Penal Code (IPC). However, it is
important to mention that Section 425 of the IPC, which penalizes "mischief,"
has not been incorporated into the IT Act. Consequently, actions such as
spreading viruses or denying access to personal data of individuals may not
carry penalties under the IT Act, potentially resulting in shorter imprisonment
terms of up to 3 months as provided by other relevant laws.
Existing Legal Remedies
Because the existing legal structure has failed to address various issues in
e-banking, the following are some of the remedies and solutions to the existing
cyber problems encountered during e-banking:
Jurisdiction and enforceability:
Because the internet is a borderless world and cybercrimes threaten the sanctity of e-banking, cyber-attacks can occur from any
computer located in India or abroad; therefore, Section 75 of the IT Act grants
universal jurisdiction whenever any type of cyberattack occurs on any computer
located within the territory of India. Cyber cells located in various districts
across India investigate and prosecute such crimes. If a cyberattack is
sponsored by a foreign state, the Republic of India may seek compensation
through attachment of that foreign state's property in India. Cyber Cells are
seeking compensation, penalties, and prosecution.
Under the provisions of the IT Act, specifically Sections 43A and 72, various
offenses such as theft, breach of confidential data, cheating, and similar
actions are deemed punishable. In cases of fraud during E-Banking transactions,
the victim is entitled to compensation. Additionally, the Banker's Book Evidence
Act ensures that digital bank records are admissible as documentary evidence in
court, as stated in Sections 65A and 65B of the Indian Evidence Act, 1872.
For matters pertaining to consumer accounts' privacy, rights, deficiencies in
E-Banking services, liabilities of banks towards their customers, and consumer
rights, the Consumer Forum with relevant pecuniary jurisdiction under the
Consumer Protection Act, 2019, can be approached for resolution.
Regarding cases of money laundering through E-Banking, the Prevention of Money
Laundering Act, 2002, specifically Section 11 empowers authorities to prosecute
and prevent such activities. Banks are also obligated under Section 11 to
maintain records of all transactions conducted through their electronic payment
Indian Bank should make an effort to keep its online banking system
well-maintained so that its customers, including consumers, can take advantage
of the many advantages that using the internet offers.
The Following Are Some Recommendations That Aim To Get More People To Use
- Indian Bank should take the required steps to raise student awareness of the bank's E-banking services to increase the current moderate level of awareness.
- Banks can implement more methods of promotion to raise consumers' awareness of E-banking services.
- If the bank takes into account the requirements of its student customers, it can improve its services to meet their expectations.
- Many consumers, despite the convenience of online banking, nevertheless prefer to use traditional channels like ATMs and bank tellers.
- The bank is now accountable for clarifying these distinct e-banking channels through ads and advertisements.
- The bank's duty is to inform the client of the advantages of using online banking and how to access them. Consumers would be prompted to abandon the more conventional methods of learning.
- Consumers who are aware of E-banking services yet don't use them, a trend researchers attribute to misunderstandings and a lack of knowledge. The bank should reach out to these consumers in an effort to convert them to their service.
- If the bank decides to do anything to increase the number of people who use online and computer banking, they might upgrade the current infrastructure. The most effective customer service is the best strategy to encourage customers to switch to E-banking.
As new technologies permeate all aspects of production and commerce, our
economy is constantly shifting. There are a plethora of other developments
taking place that are reshaping the economy in fundamental ways. Banks have been
eager to take advantage of the favourable conditions in many nations by
introducing new forms of banking that are both rapid and convenient. Banks
utilised new methods and technologies to display and deliver services in a way
that was more convenient for their consumers who used e-payments. Customers'
expectations for banking services and the industry as a whole were both altered
as a result of this.
The Indian banking industry, which plays a pivotal role in improving services
for customers, has reached a tipping point towards full digitalization.
Consumers can complete a wide variety of transactions, both monetary and
otherwise, using online banking, making it one of the most important banking
channels. Internet banking, short message service banking, automated teller
machine banking, mobile banking, electronic checks, the unstructured personal
interbanking payments system (UPI), and debit and credit cards are just some of
the options available.
E-banking has become increasingly important in today's interconnected world
because of the difficulties it has overcome and the opportunities it has
presented to the banking industry. Building customer loyalty is a key objective
for India's banking industry. Training and development, as well as streamlining
and standardising the banking process, can help achieve this goal.
The younger generation is slowly coming around to the idea that online banking
is the way to go. As time goes on, e-banking in India will grow in popularity
and become the norm.
The POS terminal market is dominated by private banks, rather than government
institutions. Throughout the country, prepaid payment instruments are
increasingly being purchased with mobile wallets. There is an ongoing effort by
the Government of India and other government agencies to improve the security,
privacy, and dependability of e-banking through the use of modern digital
Customers rely on their computers, smartphones, and other electronic banking
tools more and more, while they visit physical bank locations less frequently.
The popularity of banking via mobile device and the internet is rising quickly.
Ebanking has become increasingly popular in India, and its users are
increasingly in tune with the country's current state of affairs.
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