LEGAL IMPLICATIONS OF E-BANKING IN INDIA

BY: Uddeshya Yadav

INTRODUCTION

In the world right now there are so many smartphones user and they are rapidly increasing day by day and almost all smart phone users are using E-banking facility provided by the banks and in this pandemic time when we were in the home in the lockdown period if we have to do any transaction we have taken the help of E-banking. E-Banking is also called from different names such as Internet banking and online banking.

Daniel has defined “E-banking as the delivery of Banks 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”.

E-banking has also been defined “as the delivery of banking services through the open-access computer network the internet directly to the customer’s home or private address and services. It entails the availability of resources such as online account control, fund transfers, and the purchase of financial goods or services”.

ADVANTAGES AND DISADVANTAGES OF E-BANKING

We all are using E-Banking facility nowadays and most of them have experienced some good things and bad things about E-banking. The advantages and disadvantages of E-banking are-

Advantages of E-Banking  

1. Convenience: It is difficult for a person to find time to go to the bank to check their account balance, interest rates, good money transfers, and other updates in this busy and hectic world. For consumer convenience, the banking sector has created a virtual banking system in which a person can access their banking system at any time and from any place. When there is a banking holiday, the money cannot be exchanged in a variety of ways. The online banking system has provides ease by providing 24 hours and 365 days services. It resolves issues faced by the customers during the traditional banking system. An individual doesn’t need to stand in queue for any money deportation and transfer.[1]

2. Transfer service: The virtual banking system offers the ease of 24-hour money transfer in 365 days. You don’t have to stick to any exchange within operating hours, as you can do in 24 hours according to your preference.

3. Monitoring service: The customers can access their updated passbook anytime for monitor their transactions to manage their financial plans.

4. Online bill payment: For paying bills, you don’t have to wait in line as it has the functionality to pay any kind of bills like power, water supply, telecommunications, and other bills.

5. Quality service: By supplying them with the ease to execute their transactions at any point of the day, Internet banking has increased the efficiency of services. Without physically visiting the banks, customers may apply for loans, insurance, and all other services, which demonstrates that the standard of e-banking is fast and productive.

6. High liquidity: Basically the biggest advantage lies in this thing that you can transfer money from any place of the world you need not go to the bank personally.

7. Low-cost banking service: Reduced Internet banking makes for a higher standard of services to lower running costs. This delivers luxury at a cheaper cost of elevated customer service. The bank charges the minimum sum for operations that represent the reasonableness and quality of e-banking services.

8. High-interest rates: In comparison to banks, internet banking offers lower interest rates on home loans. The operational costs are also modest, allowing the company to save money for its clients. Other features include a no-minimum-balance account, which makes it easier to keep a zero-balance account. It increases the total disposable income of the consumers without even worry about maintaining a minimum balance.[2]

Disadvantages of E-Banking

1. Security issues: Internet banking is fully vulnerable as there are several website-related issues and hackers will hack info. It will add to financial losses for consumers. Financial information that can also cause financial losses can also be stolen.

2. Lack of direct contact between customer and banking officer: For handling user issues, online banking necessitates effective customer service. Customers, on the other hand, are disappointed by a lack of customer service. Due to technical issues, some online payments may not be reflected in the system. It also gives customers a sense of insecurity. Thus the lack of support from customer service executives is a barrier in online banking.[3]

3. Transaction problem: Customer face many problems in regards to the transaction sometimes it happens that the money has gone and it is showing transaction failed and sometimes the money actually does not transfer.

4. Long procedure to access e-banking: Government banks in some countries provide internet banking by filling out an internet banking form, which is then approved, after which you can access a security password to log in. A person must first download the software for the particular banking service, after which all passwords must be entered in order to successfully log in.

5. Training and development: Banks must conduct employee training and development programs in order to provide high-quality online resources that improve the customer experience. Training them to provide reliable care necessitates a significant financial commitment.[4]

LEGAL PROVISION RELATED TO E-BANKING

There are several provisions in relation to E-banking and it has been mentioned in different acts such as: Information Technology Act, 2000, Negotiable Instrument Act, 1881, Income Tax Act, 1961, Indian Penal Code, 1860 to secure security.

Information Technology Act, 2000:  In the Information Technology Act, 2000 has several provision related to E-Banking and the section 3(2) of the IT Act[5] talks about that they allow the use of asymmetric cryptosystems and rough electronic document authentication functions.

Section 4 of the Information Technology Act states about the Legal recognition of electronic records — Where a statute requires that information or other matter be in writing, typewritten, or printed form, such provision shall be considered fulfilled whether such information or matter is– (a) rendered or made available in an electronic form; and (b) open so that it may be used for future reference.[6]

Section 72 of the Act [7]has stated about the punishment and penalty given to the person that has received the information without the consent of the person whose information it was actually and the person has disclosed the information and he has breached the privacy of another person and he will be given the punishment of imprisonment of two years or he has to pay fine of rupees which can be extended to one lakh or he will be liable for both.

Section 79 states about the immunity of a network service provider from responsibility under different circumstances as data pass across their network.

Negotiable Instrument Act, 1881: In Negotiable Instrument Act, 1881 there is only one provision related to E-Banking which is section 6. This particular section states about cheque. The Cheque is a paper that orders a bank to transfer a certain sum of money from the account of an individual to the account of another person or business on behalf of whom the cheque has been made or given. Section 6 of the Negotiable Instrument Act is having expressions which is stating about a cheque in the electronic form and truncated cheque. The expression has been explained as-

“A cheque within the electronic kind suggests that a cheque drawn in electronic kind by mistreatment any computer resource and signed during a secure system with digital signature”.

 A truncated cheque is one that is truncated over the process of a clearing period, either by the clearing house or by the bank, whether paying or accepting payment, as soon as an electronic image for delivery is produced, obviating the need for the cheque to be physically moved.[8]

Income Tax Act, 1961: Basically in Income Tax Act there is also provision which is related to the E-banking is section 40 A. The main aim behind the introduction of Section 40 A of the Income Tax Act, 1961, includes the payment to designated accounts to verify tax avoidance. In the case of a transfer of funds, the transfer of funds only takes place between the accounts listed and serves the same function as a crossed cheque or crossed bank draught.

Indian Penal Code, 1860: Under Indian Penal Code 1860 there are several provisions as there is section 383,379,406,417,471,500 which is related to E-banking.

Section 383 states about Punishment of Extortion [9]in this section it simply says that if any person who is inducing someone to put any property or he will publish some defamatory statement he will be liable to fine or he will be liable to imprisonment or he will be liable for both the punishment.

Section 379 of the Indian Penal Code, 1860 states that if any person who has taken the electronic records or any goods out of the possession of the owner then the person will be liable for the punishment which can be  three years punishment and it can also be fine in these type of cases or both can be given.

Section 417 has told about the punishment for cheating the punishment for cheating is imprisonment which can also extend to one year or fine or both.[10]

The Indian Penal Code, Section 471, Using a counterfeit document or electronic record as legitimate- Anyone fraudulently or dishonestly uses as genuine any document or electronic record that he believes to be forged is subject to a two-year jail sentence, a fine, or both.[11]

Section 500 of the Indian Penal Code describes punishment for Defamation. Defamation simply means to injure the reputation of someone either through written format or through oral statement. The punishment for the defamation is imprisonment and which can extend to up to two years and the fine can also be imposed and both can also be applied.

The punishment is given because the image of the person or you can say the reputation has been damaged the person or the company. The person who is publishing or he knows that the statement said by him is fraudulent.

Section 506 of the Indian Penal Code states about the punishment of Criminal Intimidation and it has been stated in the act as: A individual that uses electronic means to endanger another person’s identity, health, or property in order to force that person to do an unlawful act or prohibit him from doing anything that is lawfully required of him is punishable by up to two years in jail, a fine, or both.[12]

Section 406 of the Indian Penal Code simply states that just one thing should be considered, and that is that someone who violates another person’s identity, health, or property by electronic means should be punished by detention, which can be increased to two years, or a fine, or both, whether that person is induced to perform an unethical act or prevented from performing an act that is constitutionally binding on him.

CONCLUSION

There is no doubt that every bank is providing E-banking facility and it is widely used as it is provided and it is convenient for all of them but there are some facing privacy concern and securities issues and there is a threat also. If talking about E-banking there are now many heavy securities such as firewall etc. which keep protected our information and no one is allowed to access and if somehow they have broken the law then we have several acts in which several provision are related to punishment if any one of them does anything wrong.


[1] Advantages and Disadvantages of e-banking,available at: https://sourceessay.com/advantages-and-disadvantages-of-e-banking/  (Visited on January 24, 2021).

[2] Advantages and Disadvantages of e-banking,available at: https://sourceessay.com/advantages-and-disadvantages-of-e-banking/ (Visited on January 24, 2021).

[3] Advantages and Disadvantages of e-banking,available at: https://sourceessay.com/advantages-and-disadvantages-of-e-banking/  (Visited on January 24, 2021).

[4] Advantages and Disadvantages of e-banking,available at: https://sourceessay.com/advantages-and-disadvantages-of-e-banking/  (Visited on January 24, 2021).

[5] The Information Technology Act, 2000 ( Act 21 of 2000)

[6] The Information Technology Act, 2000 (Act 21 of 2000)

[7] The Information Technology Act, 2000 (Act 21 of 2000)

[8] Negotiable Instrument Act, 1881 ( Act 26 of 1881)

[9] Indian Penal Code, 1860 (Act  45 of 1860)

[10] Indian Penal Code, 1860 (Act 45 of 1860)

[11] Indian Penal Code, 1860 (Act 45 of 1860)

[12] Indian Penal Code, 1860 (Act 45 of 1860)


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