Thursday, October 7, 2010

Online Banking Risks In India

Online banking has become an essential necessity these days. It has many benefits but along with these benefits are also some problems. The biggest issue is to safeguard the customers from Phishing attacks and online frauds.

Cyber security of internet banking infrastructure of India is the need of the hour. Instances of theft of money through hacking of accounts of the accounts holders as well as by misleading them through Phishing attacks are fast becoming a trend in India.

India is also insisting upon a weaker encryption standard (40 bits encryption) for online transactions. This also applies to online banking. Surprisingly, the Reserve Bank of India (RBI) has not shown any protest against this weakening of online banking system of India.

According to Praveen Dalal, Managing Partner of Perry4Law and the leading techno-legal expert of India, the Information Technology Act 2008 has made most of the cyber crimes and cyber offences “bailable”. India has made its cyberspace a “free zone” and “safe heaven” for cyber criminals and cyber offenders. He says that now even after committing hacking in India a person would be entitled to “bail” as a matter of right. There is nothing that prevents such cyber criminals from committing cyber crimes in India in the absence of a deterrent law.

This has resulted in an increased spate of cyber crimes including hacking of the e-mail IDs of the Internet banking users and stealing of their money. Further, IT Act 2000 also does not deal with Phishing expressly.

India has also become one of the most endemic surveillance societies of the World. Confidential information is already vulnerable and with the proposed Indian plans of installing key loggers by law enforcement officers at cyber cafes, the same would exclude the use of cyber cafes for these purposes. Although cyber caf├ęs are not a good place to transact confidential matters yet with a poor Internet penetration in India this may still happen, says Praveen Dalal.

With a weak cyber law, lack of cyber security awareness and increasing e-surveillance initiatives in India, Internet banking disputes are bound to increase in India. The government is least bothered about these issues and ultimately the account holders would have to bear the financial losses.

It is high time for the RBI to step in and do something constructive for protecting bank customers from hacking attacks and Phishing attacks. Till now RBI is escaping from its responsibilities in this regard.