Friday, January 21, 2011

RBI Must Curb Online Banking Frauds In India

The recent decision of Reserve Bank of India (RBI) to prevent ATM frauds in India is a welcome step in the right direction. The next step that RBI must take is to strengthen the entire IT infrastructure for banking industry in India.

ATM is just one of the aspects of banking industry. Online banking and Internet banking is still to be made temper proof from cyber criminals. Another challenge is the weak and cyber criminal friendly cyber law of India.

The sole cyber law of India is incorporated in the information technology act, 2000 (IT Act 2000). The Act has made almost all the cyber crimes bailable. For instance, if a person cracks your e-mail account or online banking account, the courts have to release him on bail as a matter of right. He cannot be put in jail and he would go free even after committing the offence of cracking (read hacking) in India.

RBI would have great troubles in meeting this challenge because no matter howsoever effective steps it takes, cyber criminals have great incentives to commit cyber crimes against banking institutions in India, says Praveen Dalal, a Supreme Court Lawyer and leading techno legal expert of India. The banks must use “Techno Legal Solutions” on the one hand and spread “Public Awareness” on the other, suggests Dalal.

It is clear that RBI has to meet great challenges before Indian banking industry can be considered reasonably safe from cyber criminals.