Analysis of Internet Banking Along With Legal Aspects in India Dr. Kavita
Analysis of Internet Banking Along With Legal Aspects in India Dr. Kavita
*
Assistant Professor, Law Centre-1, Faculty of Law, University of Delhi, Delhi.
114 Kurukshetra Law Journal [Vol. XI
Introduction
“India has seen a dream of Digital India. From
latest science to latest technology, everything
should be available at the tip of one's finger.” -
Narendra Modi
The banking sector has always played a significant part in
the development of any country's economy. It is essential for
every country since it meets the demands of all parts of society in
terms of credit, regardless of their economic status. The strength
of India's financial system contributes to the country's economic
potential. The introduction of information technology into the
banking sector has drastically transformed the way in which the
banking industry operates. Banks had no choice but to embrace
this new transformation in order to succeed in the new
globalization era. Nowadays, most financial transactions take
place while you are drinking your coffee or on a crucial phone
call. ATMs are just outside your door. Plastic cards outnumber
money notes in your wallet by a factor of three. The introduction
of information technology has played a significant role in this
transformation. In the modern environment, banks must function
in an atmosphere that is extremely transnational, liberalized,
commercialized, and competitive.1
1
Online banking users in India to reach 150 million by 2020 according to a
Study The Financial Express, available at
https://www.financialexpress.com/industry/banking-finance/online-
banking-users-in-india-to-reach-150-billion-by-2020-according-to-a-
study/7310 (last visited Feb 27, 2022)
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Internet Banking
As per the Daniel “Internet banking or E-banking is the
term that signifies and encompasses the entire sphere of
technology initiatives that have taken place in the banking
industry. E-banking is a generic term making use of electronic
channels through telephone, mobile phones, internet etc. for
delivery of banking services and products. Internet banking as the
delivery of bank's information and services by banks to customers
via different delivery platforms that can be used with different
terminal devices such as a personal computer and a mobile phone
with browser or desktop software, telephone or digital television”.
Internet banking is defined by Barron’s Dictionary (2006) as “A
form of banking where funds are transferred through an exchange
of electronic signals between financial institutions, rather than an
exchange of cash, checks, or other negotiable instruments”.
Internet Banking Versus Traditional Banking
The old banking system required a customer to be
physically present at the bank's branch locations for several years
before an account could be opened. Individual to individual
engagement is provided by conventional banking. Conventional
banks have a number of problems, including a set timetable,
unsuitable locations, and a restricted range of financial goods.
When using online banking, the quickest and most convenient way
to start a savings account is to connect it to an already existing
account. It is possible to complete business transactions with a
116 Kurukshetra Law Journal [Vol. XI
3
Legal Aspects of Internet Banking in India - International Journal of Law
Management & Humanities International Journal of Law Management &
Humanities, available at https://www.ijlmh.com/legal-aspects-of-internet-
banking-in-india/ (last visited Feb 27, 2022)
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WITH LEGAL ASPECTS IN INDIA
4
Criminal Procedure Code 1973
5
Legal issues in internet banking - iPleaders available at
https://blog.ipleaders.in/legal-issues-internet-banking/ (last visited Feb 27,
2022)
2021] ANALYSIS OF INTERNET BANKING ALONG 121
WITH LEGAL ASPECTS IN INDIA
6
Legal issues in internet banking - iPleaders available at
https://blog.ipleaders.in/legal-issues-internet-banking/ (last visited Feb 27,
2022)
2021] ANALYSIS OF INTERNET BANKING ALONG 125
WITH LEGAL ASPECTS IN INDIA
any time after filing a complaint with the police. The Internet can
be used to find the contact information for a district cyber cell that
is specific to where the person lives.
Responsibility in The Event of a Fraudulent Transaction
When fraud occurs, and the financial institution “is not at
fault, and the fraud was performed by a third party via an act of
scammer, phishing, or other means, the RBI guidelines provide
that the client is not obligated to pay if the breach is disclosed
within 3 days of the fraud transaction taking place. The customer's
per transaction liability will be restricted to the”“transaction value
or an amount established by the Central Bank, whichever is
smaller, if the transaction is reported after that but within seven
days of the first reporting date. Furthermore, if customers wait
more than 7 days”, "the customer's liability shall be determined as
per the bank's board-approved policy," according to the RBI
warning. Following notification to the bank, the resolution process
must be completed within 90 days, according to RBI rules. Ten
business days after a customer tells a bank that an electronic funds
transfer was made without permission, the bank must credit or
cancel that money7.
Suggestions
1. Banks are required to safeguard the confidentiality of their
customers' accounts. The RBI has issued a new circular
7
INTERNET BANKING AND LEGAL REMEDIES Lex life India,
available at https://lexlife.in/2021/07/01/internet-banking-and-legal-
remedies/ (last visited Feb 27, 2022)
2021] ANALYSIS OF INTERNET BANKING ALONG 127
WITH LEGAL ASPECTS IN INDIA
taken, and banks charge too much for cash payments, the
Act should be widened to include digital transactions.
However, even though this is covered by the RBI circular,
it is recommended that they be placed within the scope of
the law, which would be more convenient for clients.
Conclusion
Customer resistance to electronic banking continues to
exist among Indian bank customers. Understanding the underlying
causes of this reluctance might be beneficial for bank executives
when developing efforts to encourage more people to utilize
online banking. To keep fraudsters at bay, law enforcement must
go the additional mile when compared to what they are up against
on the battlefield of cybercrime. When it comes to technology, it's
“always a double-edged sword that may be utilized for both good
and negative reasons. According to the preamble of the
Information Technology Act 2000, the Act was created with the
goal of providing legal recognition for transactions carried out
using electronic data interchange and other forms of e-commerce
technology. The Act has also” amended the "Indian Penal Code
(1860), the Indian Evidence Act (1872), the Bankers' Books of
Evidence Act (1891), and the Reserve Bank of India Act 1934" in
order to make legal recognition and control of commercial
operations more accessible to the public. However, although the
goal of the Act is not to repress economic activity, it has specified
specific offenses and penalties to suffocate such omissions, which
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WITH LEGAL ASPECTS IN INDIA