2. E-Banking - The Concept
E-
Banking
Telephone
Banking
Electronic
Banking
Other Electronic
Delivery Channel
Example- ATM
(Intranet
Concept)
3. Information on E-Banking
• What is Internet Banking or E- Banking ?The performance of banking
activities via the Internet. Online banking is also known as "Internet
banking" or "Web banking." A good online bank will offer customers just
about every service traditionally available through a local branch,
including accepting deposits (which is done online or through the mail),
paying interest on savings and providing an online bill payment system.
• Easy Transaction - Electronic fund transfer is about transferring of
funds through electronic medium. It consists of transfer of funds from
one account to the other, instead of other conventional medium for e.g.
cheques/cash. It is a user friendly and customer oriented, as there is a
need of only the user to be connected to through his/her browser to the
bank’s centralized database wherein it is web enabled
4.
5. IT and E-Banking
• Sound Payment System -The
payment basis with respect to
the banks in India has its large
base via the cash medium even
though there is a provision of
that of the non-cash basis.
Many banks have taken the
initiative of setting up an IT
structure to promote electronic
mode of payment.
Sound Payment
System
• Herein the role of IT
in E-banking has
been exlained.
Information
Technology • Improvement of Financial
Infrastructure System - Several
steps have been taken by
reserve bank of India to speed
up the up gradation of banking
system through improving the
infrastructure of financial
system.Some of these steps
include the payment through
the MICR cheque as well as the
Electronic Funds Transfer and
Electronic Service Clearing
Financial
Infrastructure
System
8. Indian Scenario
E banking contributes heavily to countries
development of economy both as part of past and
future. Competition has lead to the adoption of E-
banking.
The guidelines which are set up by RBI with
respect to the security issues is not followed by
most of the banks in India.
RBI has also insisted for the banks to adopt
ethical hacking policies as the banks do not have
any clear guidelines to follow regarding this
aspect under the IT act or any by the RBI.
9. Continued..
The ICICI Bank kicked off online banking in 1996,
followed by a host of other banks. But even for
the Internet as a whole, 1996 to 1998 marked the
adoption phase, while usage increased only in
1999, owing to increased PC penetration and a
tech-friendly atmosphere.
The IT Act of 2000 did address the need for
banks to go online However, one cannot say the
aspirations of the industry have been
satisfactorily looked into. Reserve Bank of India
has taken several initiatives in setting guidelines
for Internet banking, and reviews them at periodic
intervals. and have laid out security measures to
10. Effect of E-Banking in India
Secured Future
• The future of e-banking seems secure due the ever increasing adoption and arrival of
new technologies to address existing limitations. Major innovations are expected in the
area of e-banking using mobile phones, in security provision and customer services.
Solutions
being Adopted
• Develop a clear strategy and communicate it throughout the organization.
It must be driven by the top management and should take into account the
effects of e-banking.
Solutions
being Adopted
• The electronic devices which perform interact with customers and
communicate with other banking system is called electronic banking
delivery channels which is being adopted.
• E-Banking transaction needs some interface to communicate with banking
customer. All the electronic transaction performs through some interfaces.
11.
12. Issue 1: Customers
Types of Bank Observed frequency Percentage
PSU 425 42.5
Private Bank 445 44.5
Foreign Bank 38 3.8
Co operative Bank 92 9.2
Total 1000 1000
13. Awareness of E-Banking (1 st Issue)
Particulars Category Respondents Percentage
Awareness of E-banking
offers
NO 106 10.6
Awareness of E-banking
offers
YES 894
Total: 1000
89.4
Total:100
14. Problems faced with E-Banking ( 1
st Issue)
Reason for not using E Banking Services Respondents
Satisfied with traditional Banking 51
It is difficult to use 32
Fear of insecure transaction 26
No access to Internet/Mobile/Other 28
Lack of Operational Knowledge 22
Hidden Costs 25
15. Issue 2 : Government
Failure of
Implementation
of Project
No Proper
Guidelines from
RBI
Sluggish
Services
Trust Issues
Speedy
Decisions
Needed
16. Issue 3: Small Scale
Enterprises
Smaller-Loans needed
therefore large charge so as
to cover the cost.
. The online information is
considered to will enhance
the SME’s ability wherein they
can secure financing.
Collaterals and Guarantees -in
many developing countries,
banks are still in the very
early stage of mastering
sound lending policies and
good credit practices.
17. Issue 4: Online Frauds and Internet
Security
Trail
Procedure
Error
Data Protection
Hacking
18. India VS. US Scenario
USA
The US laws if there is any
bank fraud which takes place
because of the e-banking
then the liability lies on that
of the bank wherein the bank
has to pay the liability and
there is a cap of $ 50.
USA Is more proactive when
it comes to resolving the
issue of Internet fraud.
INDIA
While the story is different
when it comes to India , here
the customer is liable for any
fraud if it takes place via the
internet.
Reserve Bank of India has come up with
draft payment vision document for the
year 2012-15 wherein it states that there
will be the introduction of that of the
customer protection measures as like
that of the zero liability clause which is
considered to be similar to that of the
paper based transaction and the proving
of the aspect of the good faith lies onto
the banks, wherein under the electronic
aspect this basically lies onto the
customers largely
19. Issue 5: Cross Border E-
Banking
Foreign Laws &
Regulations
Licensing
Policies &
Laws may
lead to due
diligence of
the bank
Treaty
Shopping
20. Issue 6: Bitcoins
It is an online system by which payment can be done.
This system involve peer to peer users for the
transaction wherein there is no need for an
intermediately. This system is regarded to be that of a
decentralized virtual currency by the US treasurery. It
is considered to a largest of its kind with respect to
the total market value which is there.
The use of Bitcoin as a form of that of the payment for
the service is growing rapidly. Even though many
merchant are accepting its use but it does not have
much market as for the retail transaction. Some
authorities like the European Banking Authority have
warned the users that they cannot be protected when
it comes to refund rights or that of the charge backs
21. Continued…
. Many of the giants are using the bitcoin like
Microsoft in the year 2004 and then the Chinese
Internet giant Baidu.
Bitcoin is seen with an eye of suspicion in India.
According to the SourceForge, this online
platform is connecting the consumers to that by
the open source project and the downloads in
India had reached to 35, 648 in India Anuj Srivas,
Reserve Bank Warns against Bitcoin Use.
23. Legal Provision
Section 131 of that of the Negotiable
Instrument Act, 1881 are of the view that
there is a need with respect to the
establishment of that of the identity as well
as to make inquiry with respect to the
reputation of that of the future customer.
That is why there was an introduction of
that under the IT Act 2000 with respect to
the digital certification machinery Refer to
Section 131 of Negotiable Instrument Act,
1881.
Section 21 of the IT Act banks to be
allowed to issue digital signature as well to
be the authority which would certify the
internet banking. RBI also has the power to
make recommendation with respect to the
Central Government for the notification of
that of the business of the certifying
authority as being an approved authority
under the clause (o) of that of Section 6(1)
of that of the Banking Regulation Act.Refer
to Section 21 of Information Technology
Act 2000.
• may assess the risk and insure themselves against such
risk
The Consumer Protection Act, 1986 clearly defines
the rights of consumers in India and is pertinent to
banking services as well. Presently, the rights and
liabilities of customers availing Internet banking
services are being determined by bilateral
agreements between the banks and customers. It is
subject to debate vwhether any bilateral agreement
defining customers rights and liabilities, which are
adverse to consumers than what they enjoy in the
traditional banking scenario will be legally secured.
Considering the banking practice and rights enjoyed
by customers in traditional banking, it appears the
banks providing I-banking may not absolve
themselves from liability to the customers on account
of unauthorized transfer through hacking. Similar
position may obtain in case of denial of service. Even
though, The Information Technology Act, 2000 has
provided for penalty for denial of access to a
computer system (Section-43) and hacking (Section –
66), the liability of banks in such situations is not
clear. The Group was of the view that the banks
providing Internet banking s.
24. Case Analysis
:If it would have been an Indian
Case
PATCO VS. PEOPLE’S UNITED BANK
Patco, a family-owned construction firm in southern Maine, fell
prey to the Zeu Sbotnet in May 2009.
According to the court ruling, indicators of the ZeuStrojan were
found on the employee's computer, but it was later quarantined
and deleted by an outside IT consultant who ran an anti-malware
scan.
Hackers bilked its account with Ocean Bank for more than
$588,000 before the fraudulent activity was detected and
stopped. The bank recovered roughly $243,000. Patco sued
Ocean Bank for the balance, but it won't see a dime.
A U.S. District Court magistrate in Maine recently recommended
the case be dismissed, citing the bank's accordance with Federal
Financial Institutions Examinations Council (FFIEC) security
guidelines.
Here the SMB’S were responsible to submit the money for the
loss.
'reasonable security' was very tightly aligned with FFIEC
guidance,"
25. Continued….
Similar Ideas but different judgement: Experi-
Metal, a Michigan-based manufacturing firm,
sued Comerica after it was robbed of more than
$1.9 million by hackers in early 2009. At the
surface, the case bears quite a bit in common
with the Patco suit, yet it produced an entirely
different outcome.
US District Court Judge Patrick J. Duggan ruled
earlier this month in favor of Experi-Metal,
requiring the bank to reimburse the company's
losses.
26. Conclusion..
Banking Regulations Act, 1949, the Reserve Bank
of India Act, 1934 and the Foreign Exchange
Management Act, 1999 The Information
Technology Act 2000 attempted to address a
number of e-commerce regulatory issues.
Reserve Bank of India has taken several initiatives
in setting guidelines for Internet banking, and
reviews them at periodic intervals. Most important,
RBI approval was made mandatory for all banks
before offering any transactional services over the
Internet.
Adoption of this type of System: While in the US n
1973, the U.S. Defense Advanced Research Projects
Agency (DARPA) initiated a research program to
investigate techniques and technologies for
interlinking packet networks of various kinds.
