Page |1

ACKNOWLEDGEMENT
Prima facie, I am grateful to the God for my good health and wellbeing
that was necessary to complete this report.

I wish to express my sincere thanks to PROF. (Dr.) V. K. SHARMA,

Professor of the Faculty of law, for providing me with all the necessary
facilities for the research.

I place on record, my sincere thanks to DEAN Prof. (Dr.) CHANDAN

BALA of the Faculty of law, for the continuous encouragement.

I am also grateful to all my lecturers, in the faculty of Law. I am

extremely thankful and indebted to them for sharing their expertise,
valuable guidance and encouragement extended to me.

I take this opportunity to express my gratitude to all the members of the

faculty for their help and support.

I also thank my family for their encouragement, support and attention

throughout this venture.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 Page |2

TABLE OF CONTENTS

S. No. HEADINGS PAGE NO.

1. Introduction 3–4
2. Banking System In India 4
3. Structure Of Indian Banking System 5-7
4. Computerisation Of Banks 7 - 13
5. E - Banking 13 - 19
Cyber Law In India: The
Information Technology Act 2000 -
6. Some Perspectives 19 - 20
Stastical Data Of Cyber Crimes
7. Under Indian Law 20 - 22
8. Conclusion 22 - 23

9. Bibliography 24

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 Page |3

I. Introduction:
The Indian banking can be broadly categorized into nationalized (government
owned), private banks and specialized banking institutions. The Reserve Bank
of India acts a centralized body monitoring any discrepancies and shortcoming
in the system. Since the nationalization of banks in 1969, the public sector
banks or the nationalized banks have acquired a place of prominence and has
since then seen tremendous progress.

The Indian banking has finally worked up to the competitive dynamics of the
‘new’ Indian market and is addressing the relevant issues to take on the
multifarious challenges of globalization. Banks that employ IT solutions are
perceived to be ‘futuristic’ and proactive players capable of meeting the
multifarious requirements of the large customers’ base. Private Banks have
been fast on the uptake and are reorienting their strategies using the internet as
a medium The Internet has emerged as the new and challenging frontier of
marketing with the conventional physical world tenets being just as applicable
like in any other marketing medium.

India’s banking sector is constantly growing. Since the turn of the century
there has been a noticeable upsurge in transaction through ATMs and also
internet and mobile banking.

The existing banking structure in India, evolved over several decades, is

elaborate and has been serving the credit and banking services needs of the
economy. There are multiple layers in today's banking structure to cater to the
specific and varied requirements of different customers and borrowers.

The banking structure played a major role in the mobilization of savings and
promoting economic development. In the post financial sector reforms (1991)
phase, the performance and strength of the banking structure improved
perceptibly. Financial soundness of the Indian commercial banking system
compares favorably with most of the advanced and emerging countries.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 Page |4

Over the next decade, the banking sector is projected to create up 2million
new jobs, driven by efforts of RBI and the government of India to integrate
financial services into rural areas. Also the traditional way of operation will
slowly give way to modern technology.

II. Banking System in India:

The Indian banking sector is broadly classified into scheduled banks and non-
scheduled banks. All banks included in the Second Schedule to the Reserve
Bank of India Act, 1934 are Scheduled Banks. These banks comprise
Scheduled Commercial Banks and Scheduled Co-operative Banks. Scheduled
Co-operative Banks consist of Scheduled State Co-operative Banks and
Scheduled Urban Cooperative Banks. Scheduled Commercial Banks in India
are categorized into five different groups according to their ownership and/or
nature of operation:

a) State Bank of India and its Associates

b) Nationalized Banks
c) Private Sector Banks
d) Foreign Banks
e) Regional Rural Banks

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 Page |5

III. STRUCTURE OF INDIAN BNKING SYSTEM:

The organized banking system in India can be classified as given below1:-

1
Article shared by smriti chand

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 Page |6

1) Reserve Bank of India (RBI):

The Reserve Bank of India (RBI) is India's central banking institution, which
controls the monetary policy of the Indian rupee. It commenced its
operations on 1 April 1935 during the British Rule in accordance with the
provisions of the Reserve Bank of India Act, 1934. The RBI plays an
important part in the Development Strategy of the Government of India. It is
the supreme monetary and banking authority in the country and controls the
banking system in India.

a) Commercial bank: Commercial banks form a significant part of the

country’s Financial Institution System. Commercial Banks are those profit
seeking institutions which accept deposits from general public and advance
money to individuals like household, entrepreneurs, businessmen etc. with
the prime objective of earning profit in the form of interest, commission
etc. The main source of income of a commercial bank is the difference
between these two rates which they charge to borrowers and pay to
depositors. Examples of commercial banks – ICICI Bank, State Bank of
India, Axis Bank, and HDFC Bank.

b) Scheduled and Non-Scheduled Banks: A scheduled bank, in India, refers

to a bank which is listed in the 2nd Schedule of the Reserve Bank of India
Act, 1934. Banks not under this Schedule are called non-scheduled
banks. Scheduled banks are usually private, foreign and nationalized banks
operating in India. However, cooperative banks are allowed to seek
scheduled bank status if they satisfy certain criteria. A scheduled bank is
eligible for loans from the Reserve Bank of India at bank rate. They are also
given membership to clearing houses.

c) Regional Rural banks: Regional Rural Banks are local

level banking organizations operating in different States of India. They have
been created with a view to serve primarily the rural areas of India with basic
banking and financial services. However, RRBs may have branches set up
for urban operations and their area of operation may include urban areas too.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 Page |7

The area of operation of RRBs is limited to the area as notified by

Government of India covering one or more districts in the State. RRBs also
perform a variety of different functions. RRBs perform various functions in
following heads:
 Providing banking facilities to rural and semi-urban areas. Carrying
out government operations like disbursement of wages of MGNREGA
workers, distribution of pensions etc.
 Providing Para-Banking facilities like locker facilities, debit and credit
cards.

d) Cooperative Marks: Cooperative banking is retail and commercial banking

organized on a cooperative basis. Cooperative banking institutions take
deposits and lend money in most parts of the world. Cooperative banking, as
discussed here, includes retail banking carried out by credit unions, mutual
savings banks, building societies and cooperatives, as well as commercial
banking services provided by mutual organizations (such as cooperative
federations) to cooperative businesses.

IV. COMPUTERISATION OF BANKS:

Based on the norms worked out by Rangarajan Committee (II), 7827
branches of the Public Sector banks were identified for full branch
computerization upto March 2000 of which around 4620 were computerized
as on March 99. Meanwhile, the networking of the already-computerized
branches also assumed urgency and some of the Banks have started inter-
connecting their computerized branches using leased telephone lines or Very
Small Aperture Terminals (VSATS). This is meant to provide a more
comprehensive service to customers and at the same time give banks better
centralized control over the branch operations. As of now, New Private
Sector and Foreign Banks have an edge over Public Sector Banks as far as
implementation of technological solutions is concerned. However, the latter
are in the process of making huge investments in technology.

The Financial Reforms that were initiated in the early 90s and the
globalization and liberalization measures brought in a completely new
operating environment to the Banks that were till then operating in a highly
protected milieu. The arrival of foreign Banks and Financial Institutions, the

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 Page |8

setting up of a number of private banks and the measures of de-regulation

that encouraged competition has led to a situation where the survival of those
who do not join the race will become difficult. Unless the state-of- the-art IT
was introduced as early as possible, winning new business and even holding
on to the old one will become increasingly difficult. Services and products
like "Anywhere Banking" "Tele-Banking" "Internet banking" "Web
Banking" , e-banking, e-commerce, e-business etc. have become the
buzzwords of the day and the Banks are trying to cope with the competition
by offering innovative and attractively packaged technology-based services
to their customers.

Simultaneously, the importance of effective MIS for control of operations

and of maintaining customer and business/industry data bases for strategic
planning has also surfaced; while Banks are looking at Data warehousing,
Data mining, Business Restructuring etc. as most essential things to have as
early as possible, they are taking urgent steps to computerize the operations
in their administrative and controlling offices (viz. head /zonal/regional
offices) as well as the data collection machinery, so as to evolve an effective
MIS. In this phase, the new communication revolution sweeping the nation
and the world has come in extremely handy, as the communication
infrastructure has improved significantly and the Internet technologies are
available to network branches at a relatively low and affordable cost with a
high degree of reliability.

The present level of MIS covers, basically, information needed for control,
performance monitoring, decision making etc. and encompasses most
activities in administrative offices like processing of statutory returns under
Reserve Bank of India Act, monthly/quarterly performance reports from
branches, credit information/BSR, inter-branch transactions, personnel
inventory, provident fund accounting, profit and loss accounts, cash and
investment management, stationery stock accounting, and branch
housekeeping etc.2

2
www.banknetindia.com

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 Page |9

 Computerization in Public Sector Banks (As on March 31, 2006):

1.
Branches already Fully Computerized # 48.5%

2. 28.9%
Branches Under Core Banking Solutions

3.
Fully Computerised Branches (i+ii) 77.5%
4.
Partially Computerised Branches 18.2%
5.
Non Computerised Branches 4.3%

#: Other than branches under Core Banking Solutions.

 Computerization of Bank Branches:

The reforms in the 1990s, which led to expansion, consolidation and
liberalization of the banking and financial sector in India, brought in
many changes and challenges.

A number of private and foreign players entered the Indian market with
superior technologies that helped them service their customers
efficiently through multiple channels such as ATMs and online
banking.

Indian banks on the other hand have been using IT more out of com-
pulsion and primarily for transaction processing. They now need to
adopt IT to reposition banks into the integrated financial services
market.

The need for providing improved customer service, reducing

transaction costs and increasing productivity, shall be the main drivers
for banking sector to adopt IT. These considerations are particularly
important for public sector banks in India, who are facing immense
competition from private and foreign banks.

IT can help them move from the present scenario where they are
working as isolated islands to providing a centralized banking ex-
perience. There is a need today for IT and the financial community to

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 10

come together and develop customized IT solution to make the Indian

Banking sector globally competitive.

IT adoption in the banking sector will provide real time availability of

transaction processing through multiple channels. It would enhance a
bank's ability to cross sell products, ensure better management and
security and safety of funds and increase efficiency through integration
of systems across various locations.

It would also ensure efficient management of Non Performing Assets

(NPAs), minimize transaction costs, enhance ability to conduct in-
depth financial analysis and gather business intelligence. Enhanced use
of IT would also encourage the use of Internet to provide access for
online bill payments, funds transfers and e- statements in addition to
encouraging wireless mobile banking and e-commerce.

With growing competition faced by foreign banks and financial

institutions, the public sector banks in co-operation with the Indian IT
industry would need to equip themselves for the next phase of
introducing the benefits of IT to their customers by providing a
centralized banking solution.

 Opportunity for Indian banking sector in branch computerization:

a) IT Networking
b) System Integration and Management
c) Customer Relationship Management (CRM) Applications
d) Back Office processing and Call Centres
e) Data warehousing/ Data mining
f) Mobile and e-banking.

 Computerization of Banks In India:

E-commerce and e-banking are the buzz words in the global
commercial activities today. E-banking or Electronic banking refers to
conducting banking activities with the help of information technology
(IT) and computers.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 11

 Computerization of banking functions in India was resisted by labour

unions for fear of loss of job opportunities.
 Secondly, computerization needs IT savvy personnel which require
intensive technical training.
 Thirdly, computerization needs heavy capital outlay for purchase of
machines.
 Fourthly, to have effective computerization of banks a large number
of bank branches situated in rural areas need to be connected.
Telecommunication facility at rural areas is slow to reach. For the
reasons mentioned above, computerization made a slow entry in
Indian banks.

 Rangarajan Committee:
In the early 1980s, a high level committee was formed under the
chairmanship of Dr. Rangarajan, the then Governor of Reserve Bank of India
to suggest measures for phased introduction of computers and mechanization
of banking activities in India.

However, the focus of computerization at that time was on customer service

in banks. Accordingly during 1985 - 89 two models of branch automation
were developed for implementation in banks.

They were (a) front office mechanization, and (b) back office automation. In
the front office mechanization front desk operations were computerized
leaving back office activities carried under manual system.

In the back office automation, back office operations like maintenance of

General Ledger accounts, etc., were computerized while front office work
was done manually.

Under both the systems, customers were given regular and timely statement
of accounts without any errors. Having achieved the basic objective of
introducing elements of automation in banks, the second committee
constituted in 1988 under the chairmanship of same Dr. Rangarajan drew up
a detailed plan for computerization of banks in India.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 12

Accordingly automation, i.e., use of machines like computers, use of IT, etc.,
were extended to other areas of banking activities like funds transfer,
Automated Teller Machines (ATM ), transmission of messages through
electronic mail system, etc.

 Present position of computerization in banks in India:

Based on the suggestions made by Rangarajan Committee, banks started
initiating measures to computerize their various operations. Public Sector
Banks (PSU banks) started identifying important / large branches for full
branch computerization.

Banks which had fully computerized some of their branches started inter-
connecting their computerized branches using leased telephoned lines or
through satellite system. This enabled banks to have a better centralized
control over branches besides ensuring comprehensive service to their
customers.

In the third stage, banks started providing for sizeable funds for
computerization of their operations. It was necessitated due to financial
sector reforms initiated in the early 90s through Narasimham Committee
recommendations.

Further globalisation and liberalisation measures introduced during 1990s

allowed setting up of new private sector banks and free entry of foreign
banks into India. This brought in a different and new operating environment
to banks.

The deregulation of interest rate regime, phased reduction in Cash Reserve

Ratio / Statutory Liquidity Ratio, introduction of universal banking system,
permission to start new banks in the private sector, etc., by Reserve Bank of
India encouraged competition among banks.

These measures had pushed the Indian banks to go for state-of-art IT and
services and products like " anywhere banking ", " tele- banking" etc.
Simultaneously the importance of effective Management Information
System (MIS) for control of operations, maintenance of data base, good
customer relationship was felt.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 13

Accordingly banks presently cover performance monitoring, decision

making, control of branches, administrative matters, submission of statutory
returns to RBI, inter branch transactions, reconciliation of outstanding
entries in various accounts, funds transfer, credit related information,
investment management, treasury operations through money market, fore
market, securities market, employees personal data and scores of other
operations with the use of IT and computers.

Yet the level of computerization may differ from banks to banks. Today, we
may say that 80 per cent of banking operations in cities are computerized.
The process is fast picking up even at rural branch level.

Today, the number of computers in use with banks in India had crossed 1,
00,000. The total number of ATMs is more than 2000.

V. E-BANKING:
The acceleration in technology has produced an extraordinary effect upon
our economy in general has had a particularly profound impact in expanding
the scope and utility of financial products over the last ten years.

Information technology has made possible the creation, valuation, and

exchange of complex financial products on a global basis and even that just
in recent years.

Derivatives are obviously the most evident of the many products that
technology has inspired. But the substantial increase in our calculation
capabilities has permitted a variety of other products and, most beneficially,
new ways to unbundle risk.

What is really quite extraordinary is that there is no sign that this process of
acceleration in financial technology is approaching an end.

We are moving at an exceptionally rapid pace, fueled not only by the

enhanced mathematical applications produced by our ever rising computing
capabilities but also by our expanding telecommunications capabilities and
the associated substantial broadening of our markets.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 14

All the new financial products that have been created in recent years
contribute economic value by unbundling risks and reallocating them in a
highly calibrated manner.

The rising share of finance in the business output of India and other
countries is a measure of the economic value added by the ability of these
new instruments and techniques to enhance the process of wealth creation.
The reason, of course, is that information is critical to the evaluation of risk.

The less that is known about the current state of a market or a venture, the
less the ability to project future outcomes and, hence, the more those
potential outcomes will be discounted.

1) Meaning Of E-Banking:
E-bank is the electronic bank that provides the financial service for the
individual client by means of Internet.

2) Types Of E-Banking:
a) Deposits, withdrawals, inter-account transfers and payment of linked
accounts at an ATM;
b) Buying and paying for goods and services using debit cards or smart
cards without having to carry cash or a cheque book;
c) Using a telephone to perform direct banking - make a balance enquiry,
inter-ac- count transfers and pay linked accounts;
d) Using a computer to perform direct banking - make a balance enquiry,
inter-account transfers and pay linked accounts.

3) Advantages Of E-Banking:
The following are the important benefits of e-banking:

a) Account Information: Real time balance information and summary of

day's transaction.

b) Fund Transfers: Manage your Supply-Chain network, effectively by

using our online fund transfer mechanism. We can affect fund transfer on a
real time basis across the bank locations.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 15

c) Request: Make a banking request online.

d) Account Information: The complete database that the bank has about our
company is available to us at our terminal. It provides us:
i.) Current balance in our account on real-time basis.
ii.) Day's transactions in the account.
iii.) Details of cash credit limit, drawing power, amount utilized, etc.

e) Downloading of account statements as an excel or text files: The

statements can be integrated with your ERP system for auto-reconciliation.

f) Fund Transfers: Manage our Supply-Chain network, effectively by using

our online fund transfer mechanism. We can affect fund transfer on a real
time basis across the bank locations. The product facilitates:
 One-to-one fund transfer between two linked accounts.
 Bulk fund transfers: In bulk fund transfers, we upload a flat file
containing payment/collection information. Our systems take care of
processing the entire file and once the file is processed we can integrate
the processed file to our ERP for auto reconciliation.

g) Net Based Transfers: The real life situation of user-wise limits and
multilevel signatories can be mapped in the net-based fund transfer module
too. We can specify user-wise cap for funds transfer and the number of
approvals needed for each fund transfer. The fund transfer will not take
place unless the required number of signatories has approved it.

h) Power of attorney: With a Power of Attorney from our dealers, we can

link the dealer's accounts to our account in order to have an online fund
transfer, saving us time and money involved with cheque collection
systems. Alternatively, the dealer can credit our account through this chan-
nel. Similarly, we could also affect vendor and other payments online.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 16

i) Customers can also submit the following requests online: Registration

for account statements by e-mails either daily/weekly/fortnightly/monthly
basis.
i.) Stop payment of cheque
ii.) Cheque book replenishment
iii.) Demand Draft/Pay-order
iv.) Opening of fixed deposit account
v.) Opening of Letter of credit

j) Internet connectivity: The company does not have to spend anything

extra to avail such facilities. All it requires is Internet connectivity. The
product enables the company to pro-actively manage its cash flows, ease
reconciliation efforts as all the MIS is available at the click of the mouse.

k) Customer can Integrate the System with his Own ERP: The customer
can download the account statements either as a text file or as an excel file.
The bank can help him in integrating the account statements and bulk
payment files with his ERP system. The Bank may charge a nominal fee
depending upon the nature of work involved.

l) Bill Payment through Electronic Banking: Internet has thus ushered the
concept of anytime and anywhere banking. To the individual the onerous
task of visiting several places to settle his service bills like telephone,
water, electricity, etc., can be overcome through the electronic Bill Pay
service provided by the bank.

He can pay his regular monthly bills (telephone, electricity, mobile phone,
insurance, etc.) right from his desktop. No more missed deadlines, no more
loss of interest. He can schedule his bills in advance, and thus avoid
missing the bill deadlines as well as earn extra interest on his money.

m) The Electronic Shopping Mall: The customer can also make his shopping
payment through the Bank's secure website-so that he can shop online
without any security worries, as the bank can provide online real time
shopping mail services through partner shopping sites.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 17

n) Effecting Personal Investments through Electronic Banking: The

bank's website can also allow the customer to invest in shares, mutual
funds and other financial products.

o) Trading in shares:
i. Cash Trading: This is a delivery based trading system, which is
generally done with the intention of taking delivery of shares or monies.
ii. Margin Trading: Customer can also do an intra-settlement trading
normally up to 4 times his available funds, wherein he can take long
buy/ short sell positions in stocks with the intention of squaring off the
position within the same settlement cycle.
iii. Spot Trading: When looking at an immediate liquidity option, 'Cash on
Spot' may work the best for him. On selling shares through "cash on
spot", money is credited to his bank a/c the same evening and not on the
exchange payout date. This money can then be withdrawn from any of
the Bank's ATMs.

p) Investing in Mutual funds: Electronic banking also brings the customer

the same convenience while investing in Mutual funds - Hassle free and
Paperless Investing. He can invest in mutual funds without the hassles of
filling application forms or any other paperwork. He needs to provide no
signatures or proof of identity for investing. Once he places a request for
investing in a particular fund, there are no manual processes involved. His
bank funds are automatically debited or credited while simultaneously
crediting or debiting his unit holdings.

q) Trade in Derivatives: Trading in derivatives includes the following:

i.) Futures: Through electronic banking the customer can also trade in index
and stock futures on the approved stock exchange. In futures trading, he
takes buy/sell positions in index or stock(s) contracts having a longer
contract period of up to 3 months.
ii.) Options: An option is a contract, which gives the buyer the right to buy
or sell shares at a specific price, on or before a specific date. For this, the
buyer has to pay to the seller some money, which is called premium.
There is no obligation on the buyer to-complete the transaction if the
price is not favorable to him.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 18

To take the buy/sell position on index/ stock options, he has to place

certain percentage of order value as margin. With options trading, he can
leverage on his trading limit by taking buy/sell positions much more than
what he could have taken in cash segment.

r) Initial Public Offers Online: The customer could also invest in initial
public offers online without going through the hassles of filling ANY
application form/ paperwork. Get in-depth analyses of new initial public
offer issues, which are about to hit the market and analysis on these. Initial
public offer calendar, recent initial public offer listings, prospectus/offer
documents, and initial public offer analysis are few of the features, which
help a customer to keep on top of the initial public offers markets.

'There can be no end to the variety of services that can be provided through
the electronic channel by banks and financial institutions. Every Institution
is trying constantly to innovate and offer new products to woo the
customer.

The benefit to the customer on account of the Internet is that he is able to

know at a time the types of facilities being provided by different
Institutions and he is able to make the best choice suited for his needs.

The benefit to the employee is equally amazing. From being earlier a dumb
worker filling up forms and copy from books, he is now a regular service
provider and one who directly cares for the customer.

Earlier he was dealing with particular process, but today he handles

customer's demands, which are functions for the bank/financial institution.

In turn the knowledge resources required of him has grown and he is able
to secure the same through better training and other organizational
development programmes like organising work groups and functional
teams, where persons with different skills and qualifications pool their
knowledge and carry out high-tech services and operations.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 19

s) Other benefits: The e-banking provides some other benefits also. They
are:
 Convenience.
 Speed of concluding transactions.
 Safety - banking from own home.
 Economy - banking without visiting your bank.
 Cheaper service fees.
 Seamless Integration with existing environment (IDM - Intelligent
Data Module).
 Highly Saleable.
 Easy Customization.
 Lower Costs of both Installation and Maintenance.
 Platform Independence.
 Round-the-Clock and Cross-Border Availability.
 Remote Authorization.

VI. Cyber law In India: The Information

Technology Act 2000 - Some Perspectives:
Information technology is one of the important law relating to Indian cyber
laws. It had passed in Indian parliament in 2000. This act is helpful to
promote business with the help of internet. It also set of rules and regulations
which apply on any electronic business transaction.3

1) Advantages of I.T. Act 2000:

a) Helpful to promote e-commerce
 Email is valid
 Digital signature is valid.
 Payment via credit card is valid.
 Online contract is valid

Above all things validity in eye of Indian law is very necessary. After making
IT act 2000, all above things are valid and these things are very helpful to
promote e-commerce in India.
3
The Information Technology Act, 2000 (also known as ITA-2000, or the IT Act) is an Act of the Indian
Parliament (No 21 of 2000)

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 20

b) Enhance the corporate business:- After issuing digital signature,

certificate by Certifying authority, now Indian corporate business can
enhance.

c) Filling online forms:- After providing facility, filling online forms for
different purposes has become so easy.

d) High penalty for cyber crime:-Law has power to penalize for doing any
cyber crime. After making of this law, nos. of cyber crime has reduced.

VII. STASTICAL DATA OF CYBER CRIMES UNDER

INDIAN LAWS:
Cyber Crimes up by more than 3 times in 5 years:

IT Act IPC

Cases Persons Cases

Year Registered Arrested Registered

2011 1791 1184 422 446

2012 2876 1522 601 549

2013 4356 2098 1337 1203

2014 7201 4246 2272 1224

2015 8045 5102 3422 2867

Total 24269 14152 8054 6289

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 21

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 22

VIII. CONCLUSION:
The paper gives a brief overview of cybercrime scenario in the banking
sector and impact of cybercrimes on bank finances. The major
cybercrimes which plague the banking sector are ATM frauds, Denial of
Service, Credit Card frauds, phishing, etc. The rapid growth to global
electronic crime and the complexity of its investigation requires a global
presence.

Presently, the measures undertaken the banks are not sufficient and
therefore it is imperative to increase cooperation among the banks across
the world for the development of tools and models which can be applied
to counter global banking cybercrimes.

It is observed that PSBs fare better than PVBs in terms of total number of
bank frauds. However, the total amount involved is much higher in PSBs
as compared to the private sector.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 23

This can be attributed to large size of loans which PSBs offer to

customers.Credit related frauds have the maximum impact in all the
banking frauds in India because of the high amount involved and the
cumbersome process of fraud detection followed by CVC.

The frauds may be primarily due to lack of adequate supervision of top

management, faulty incentive mechanism in place for employees;
collusion between the staff, corporate borrowers and third party agencies;
weak regulatory system; lack of appropriate tools and technologies in
place to detect early warning signals of a fraud; lack of awareness of bank
employees and customers; and lack of coordination among different
banks across India and abroad. The delays in legal procedures for
reporting, and various loopholes in system have been considered some of
the major reasons of frauds and NPAs.

Also, despite efforts, banks have not been very successful in conviction
of individuals responsible for financial crimes. One of the root causes of
this problem is identified as lack of specialized financial sleuths with
knowledge of nuances of forensic accounting as well as a good legal
understanding of frauds.

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY
 P a g e | 24

IX. BIBLIOGRAPHY:

wordpress.com


www.google.com


www.advocatekhoj.com


https.//en.wikipedia.org


The Information Technology Act, 2000

INDIAN BANKING SYSTEM WITH SPECIFIC REFERENCE TO CYBER CRIMES: A CRITICAL STUDY