INTRODUCTION:

“Internet Banking” refers to systems that enable bank customers to access accounts and general information on bank products and services through a personal computer (PC) or other intelligent device”¹

With the change in the time the rise of the new internet era has contributed a lot in the life style of the people living on the earth. Internet is bringing so many changes in people’s life that they can get whatever they think by sitting at home and without making any efforts. This is the benefit of using internet. Almost all the banks in the world are providing the online facility that includes from day to day transactions to account opening, issuing credit cards paying and getting the loans and debts and providing customers facilities to shop online. Some banks are also providing facilities to draw cash from their bank accounts online and they can pay their bills online. Now this is what one will call the revolution because the online E-Banking is the best part about using the internet. With the use of online banks, one feels secure and by sitting at home and one can do his monetary transaction and he do not need to go to bank time after time.

Just log in to the website of his bank and enter his account number and that is it. We can get access to all the offers provided by banks to his customers and we can perform our desire task about our bank account.

The offer remains the same as they are for physical customers and sometimes banks offer more to people who deal online with their accounts. Sometimes the customer has problem to get access to their account instantly and they cannot afford to go to their bank. At that time the online-Banking facility seems best to them for performing their monetary action that they required. All the international banks like RBS, Barclays, Standard Charters and State bank of America, JSB bank and many other famous and local banks have the online websites that provides facilities for customers to get connected with the banks from their homes, offices or even outside the country. This service also provides you with facility to open a new account online. You can get online forms and you have to fill the form and submit them. When you will have an online account with banks, they deal with your other matters and you are free of worries to go bank to solve your money problems. That is why the concept of online-Banking is getting better day by day.

E-Banking now days are the common trend in our country. No more falling in line in banks, no more waiting tons of hours in the banks in the bank, no more days and weeks of waiting. All can be done with one card, one gadget. It’s easy, it works, and most importantly, people like it. But still some people are having a hard time using this kind of technology mostly people who are used to do things the old traditional way. With the use of advertising, people are now motivated to use – E- Banking because again, it eliminates the hassle encountered when using the old process of banking.

This changing financial landscape has posed new challenges for banks and policymakers/supervisors. Banks now have increased reliance on technology to compete in an increasingly competitive business environment and thus need to effectively manage the IT security and other related risks. Central Banks and supervisory authorities are facing new challenges in banking supervision as well as in designing and implementing monetary policy. The growing scope of E-Banking and increasing complexity of banking products and services demands continuous adaptation of regulatory framework and effective supervisory oversight.

‘Each and every coin has two sides”, like that E-Banking system provides lots of advantages and also it is very much beneficial for the growth of economy of a country rapidly. But there are number of disadvantages which ultimately resulted to be a challenge. Security issues and different impacts regarding the traditional banking method and also concerned about the issues presented because think that these issues are very important and relevant today, a lot of people save money.² Even, through due to E-Banking system there are number of challenges which are facing by India and try to related with existing laws which regulating E-Banking system in India is up to mark or not, as because now a days, there is increase position in Cyber - Crime. Thus, Electronic banking is the wave of the future. It provides enormous benefits to consumers in terms of the ease and cost of transactions. But it also poses new challenges for country authorities in regulating and supervising the financial system and in designing and implementing macroeconomic policy.

E-Banking system is a basic trend of the financial institutions or banks of every country whether developed country or developing country for their up benefit. Each and every country of the globe has their respective rules or regulations related to handing the procedure of E-Banking system. This may cause difference between them. Due to this some country facing some challenges or some country is in a position to carry on the system systematically with full security.

In India, there are guidelines or legal frame work for regulating the system and try to control the risks. Reserve Bank of India and judiciary took number of steps and frame rules and regulation so that there should not exist any lacuna in regulating the system. And they are always in a position to satisfy the need of the hour for that they occasionally amend laws and even frame laws. Still in India, due to the system it can be traced out that along with the development of economy, country facing various problems like cyber crime and other frauds.

In the entire globe, where the wave of electronic mechanism of banking is creating revolutionary changes and inviting easy way for both customers and bankers to carry on their money business, India, still in an uprising stage. System of E-Banking in India is creeping and making its shape in a manner which is still not satisfactory. There are many episodes of E-Banking which are still missing its prudence in India and which has its own present work is that, through E-Banking is a gift of ease to the-Banking system it is far from its full form in India. Thus to employ the system in its fullest form lacunas need to be removed and up dated process need to be installed.

E-Banking System: Concept and Its Starting Era

People earn money to meet their day-to-day expenses and also to save money for future expenses. With this practice, savings were available for use whenever needed, but it also involved the risk of loss by theft, robbery and other accidents. Thus, people were in need of a place where money could be saved safely and would be available when required. Banks are such places where people can deposit their savings with the assurance that they will be able to withdraw money from the deposits whenever required. People who wish to borrow money for business and other purposes can also get loans from the banks at reasonable rate of interest.

Bank is a lawful organization, which accepts deposits that can be withdrawn on demand. It also lends money to individuals and business houses that need it. Banks also render many other useful services – like collection of bills, payment of foreign bills, safe-keeping of jewelers and other valuable items, certifying the credit-worthiness of business, and so on. Banks accept deposits from the general public as well as from the business community. Anyone who saves money for future can deposit his savings in a bank.

E-Banking System:

Banking activity carried on through computers and other electronic means of communication is called ‘electronic banking’ or ‘E-Banking’.³ E-Banking or Electronic banking refers to conducting banking activities with the help of information technology (IT) and computers. 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.⁴

Boons and Banes of E-Banking System

Functions of E-Banking system:

At present, the personal e-bank system provides the number of services, such as, Inquiry about the information of account, Card accounts' transfer, Bank-securities accounts transfer, The transaction of foreign exchange, The B2C disbursement on net, Client service, Account management, Reporting the loss of the account, Pay a bill, Track payment history, etc.

Disadvantages of E-Banking:

If there are advantages in venturing to E-Banking, there are also disadvantages. Even the pioneers of E-Banking are not sure of what this technology can bring in the future .Here are some of the issues/arguments⁵: Such as,

When using an Internet banking account, the account owner may have no face to face interaction with a bank employee if the bank does not have a brick and mortar location. This can make resolving disputes more difficult as the account holder will have to make a phone call and possibly wait on hold, or be forced to send an email.⁶ Traditional banks will find it difficult to evolve. With this issue, it’s very simple, even though the concept of E-Banking is about doing transactions with ease, trying to evolve into one is difficult. It really requires study, and analyzing competitors and using advertising as a main weapon to attract consumers.⁷ The start-up costs of an e-bank are high. Starting this kind of technology requires a large amount; this covers the advertising expenditure, and the purchasing of the said technology.⁸ It sometimes takes more time to Start-up, have to pay Bank Site Charges etc.

E – Banking Frauds in India

“Lapses in system make easy the job of offenders to dupe banks”⁹

Computer crimes are different from the usual crime, vis-à-vis investigations. Here, the criminals has just to drum a key board and drums of money are taken away, no personal exposure, no written documents, no signature, no finger prints, no voice. The criminal is truly faceless. The commission of Computer crimes is done with lightening speed without leaving any trace relating to time element. Computer crimes are of varied nature.¹⁰ The Information Technology is increasingly harnessing in a big way to bring in greater efficiency, accuracy and speed in the business. Computer crimes are those committed with a computer theft, forgery, counter-fecting etc.¹¹

Any illegal behavior directed by means of electronic operations that targets the security of computer systems and the data processed by them is termed as cyber crime. Cyber crime in a broader sense is computer-related crime.¹²

Types of E-Banking frauds:

Offline fraud and Online fraud.¹³ Most offline fraud incidences happen as a result of theft of your mail, sensitive information related to your bank or credit card accounts, stolen ATM/debit/credit cards, forged/ stolen cheques etc. You can protect yourself from such instances by exercising caution while receiving, storing and disposing your account statements as well as your cheques, ATM/debit and credit cards. Online fraud occurs when someone poses as a legitimate company that may or may not be in order to obtain sensitive personal data and illegally conducts transactions on your existing accounts. Often called “phishing” (An online identity theft scam. Typically, criminals send emails that look like they're from legitimate sources, but are not. The fake messages generally include a link to phony, or spoofed, websites, where victims are asked to provide sensitive personal information. The information goes to criminals, rather than the legitimate business.) Or “spoofing” (An online identity theft scam. Typically, criminals send emails that look like they're from legitimate sources, but are not (phishing). The fake messages generally include a link to phony, or spoofed, websites, where victims are asked to provide sensitive personal information. The information goes to criminals, rather than the legitimate business.) , the most current methods of online fraud are usually through fake emails, Web sites and pop-up windows, or any combination of such methods.

Legal Frame Work for E – Banking System in India

Internet Banking, with its ability to reach each and every nook and cranny of the world holds great importance for a nation like India, where conventional Banking services are out of reach for a large proportion of the masses. But to make it a success it requires more than just an adequate internet enabling infrastructure. There is a dire need for an adequate legal and regulatory framework to be put into place.

Electronic Banking or Banking Over Electronic Medium:

All banking transactions and Services carried or availed by the Customer other than by direct personal interface with the branch of the Bank such as over telephone, ATM, Net-Banking, Mobile Phone, fax, kiosks or other electronic mediums are referred to as "Banking over an Electronic Medium or Electronic Banking". The facility of Electronic Banking is provided as a convenience to the Customer only and it is implicit in the Customer availing this facility that the Customer recognizes that the Bank will not preserve any record of the instructions given by the Customer for availing this facility and hence the Customer will not contest any transaction carried out or not carried out by the Bank, over Electronic Banking, shall accept the record of the transaction maintained by the Bank, without any demur or protest, and hold the Bank harmless and blameless against any loss, or consequences thereof, arising from any transaction carried out or not carried out over Electronic Banking. Against the above Cancel ground, the Customer can use any services provided by the Bank over Electronic Bank. Some of the Services, which the Customer can avail over Electronic Banking and conditions of such Services are given below¹⁴:

Withdrawal of Electronic Banking:

The Bank without assigning any reason shall be entitled to withdraw from any of its Customers Electronic-Banking facility or any one or more of them. Without prejudice to the foregoing, the Bank shall also be entitled to withdraw such facility if:¹⁵

The minimum balance requirement in respect of the Customer / user accounts is not met with / fulfilled and / or the service charges remain unpaid and /or for any other or no reason. In event the Electronic Banking is withdrawn, it shall neither be obligation for the Bank to give any notice to the Customer nor shall the Bank incur any liability whatsoever by reason of withdrawal of Electronic Banking.

RBI Guidelines for Internet Banking:

The Reserve Bank of India had set up a 'Working Group on Internet Banking' to examine different aspects of Internet Banking (I-banking). The Group had focused on three major areas of I-banking, i.e, Technology and security issues, Legal issues and Regulatory and supervisory issues. A copy of the Group's report is enclosed. RBI has accepted the recommendations of the Group to be implemented in a phased manner. Accordingly, the following guidelines are issued for implementation by banks.¹⁶

Legal Issues:

a) Considering the legal position prevalent, there is an obligation on the part of banks not only to establish the identity but also to make enquiries about integrity and reputation of the prospective customer. Therefore, even though request for opening account can be accepted over Internet, accounts should be opened only after proper introduction and physical verification of the identity of the customer. ¹⁷

b) From a legal perspective, security procedure adopted by banks for authenticating users needs to be recognized by law as a substitute for signature. In India, the Information Technology Act, 2000, in Section 3(2) provides for a particular technology (viz., the asymmetric crypto system and hash function) as a means of authenticating electronic record. Any other method used by banks for authentication should be recognized as a source of legal risk.

c) Under the present regime there is an obligation on banks to maintain secrecy and confidentiality of customers' accounts. The banks should, therefore, institute adequate risk control measures to manage such risks.

d) In Internet banking scenario there is very little scope for the banks to act on stop-payment instructions from the customers. Hence, banks should clearly notify to the customers the time frame and the circumstances in which any stop-payment instructions could be accepted.

e) The Consumer Protection Act, 1986 defines the rights of consumers in India and is applicable to banking services as well. Currently, the rights and liabilities of customers availing of Internet banking services are being determined by bilateral agreements between the banks and customers. Considering the E-Banking practice and rights enjoyed by customers in traditional banking, banks' liability to the customers on account of unauthorized transfer through hacking, denial of service on account of technological failure etc. needs to be assessed and banks providing Internet banking should insure themselves against such risks.

III. Regulatory and Supervisory Issues:

The existing regulatory framework over banks will be extended to Internet banking also. In this regard, it is advised that:

1. Only such banks which are licensed and supervised in India and have a physical presence in India will be permitted to offer Internet banking products to residents of India. Thus, both banks and virtual banks incorporated outside the country and having no physical presence in India will not, for the present, be permitted to offer Internet banking services to Indian residents.¹⁸

2. The products should be restricted to account holders only and should not be offered in other jurisdictions¹⁹.

3. The 'in-out' scenario where customers in cross border jurisdictions are offered banking services by Indian banks (or branches of foreign banks in India) and the 'out-in' scenario where Indian residents are offered banking services by banks operating in cross-border jurisdictions are generally not permitted and this approach will apply to Internet banking also. The existing exceptions for limited purposes under FEMA i.e. where resident Indians have been permitted to continue to maintain their accounts with overseas banks etc., will, however, be permitted. ²⁰

4. Overseas branches of Indian banks will be permitted to offer Internet banking services to their overseas customers subject to their satisfying, in addition to the host supervisor, the home supervisor.²¹

Effective Cybercrime Legislation:

As part of the global efforts to promote e-commerce trust and confidence, every nation should have basic criminal laws against activities that attack the confidentiality, integrity or availability of computer data, computer system and electronic networks. In order to flight cyber crime, there is a need to clarify what constitutes an offence or a crime, especially in a global context when prosecution of transnational illegal activities would be expected. Governments should agree on the definitions of certain crimes committed in the Internet environment. Laws would need to be enacted to criminalize hacking, illegal interception, interference with the availability of computers and networks and unlawful access to system.²²

An attempt to address the international nature of cybercrime and develop a common standard for cybercrime law was made by the Council of Europe (COE) in the Convention on Cybercrime that was publicized in its final form in June 2001. The Commonwealth also published a Model Law on Computer and Computer Related Crimes that was published in October 2002. The model law was developed by an expert group while reviewing the details of the provisions in the Convention on Cybercrime.²³

The main intent of the COE Convention is to pursue a common criminal policy aimed at the protection of society against cybercrime, by adopting appropriate legislation and fostering international cooperation, among other activities. The Convention includes a list of crimes and requires that certain activities be criminalized. These include such activities as hacking (including production, sale or distribution of hacking tools); offence relating to child pornography and expanded criminal liability for intellectual property violations. It also requires each signatory state to implement surveillance powers as well as the duty of governments to help each other gather evidence and enforce laws.²⁴

Finally, the Convention requires signatory states to provide international cooperation to the widest extent possible for investigations and proceedings concerning criminal offence related to computer systems and data or for collecting evidence in electronic form of a criminal offence. Law cooperates with their requests for assistance in the pursuit of criminals across national borders, something that is common in Internet Crime.²⁵

Evidence and cyber law

Evidence is information that tends to prove or disprove a fact in question. Evidence may consist of documents, public records, affidavits or the testimony of witnesses. The law of evidence is a part of the law of procedure. The Indian Evidence Act applies to all judicial proceedings before any court material. According to the United Nation Commission on International Trade law (UNCITRAL) on Electronic Commerce (Article 7), information shall not be denied legal effect, validity or enforceability solely on the grounds that it is in the form of a data message. According to Article 6, where the law requires information to be in writing, that requirement should be met by a data message if the information contained therein is accessible so as to be usable for subsequent reference. Article 8 states as where the law requires information to be presented or retained in its original form, that requirement are met by a data message.²⁶

The Indian Evidence Act 1872 does not define a computer but allows for copies to be made by mechanical processes. Reference to computer and media are made as regards Evidence in the Companies Act, 1956. There are number of provisions applicable to electronic records etc., such as section 17, 18, 19, 20, 21, 22A, 32, 34, 35, 45, 46, 51, 57, 58, 60, 73,159 of The Indian Evidence Act 1872.

An admission is a statement oral or documentary or contained in electronic form, which suggests any inference as to ay fact in issue or relevant fact and which is made by any of the persons and under the circumstances, hereinafter mentioned.²⁷ A new section 22A²⁸ has been inserted to provide for relevance of oral admissions as to contents of electronic records in certain circumstances. It applies to circumstances where, the electronic record is a primary evidence.

Entries in books of accounts including those maintained in an electronic form when relevant.²⁹ Relevancy of entry in public record or an electronic record made in performance of duty is also relevant.³⁰

Other relevant provisions:

The Indian Information Technology Act, 2000, basically a framework law, makes hacking a punishable offence under Section 66. Breach of information security is implicitly recognized as a penal offence in the form hacking. The ‘appropriate government’ (central/state) is empowered to declare any ‘computer’, ‘computer system’ or ‘computer network’ as a protected system. A ten year prison term and a hefty fine await any person who secures access to the ‘secured computer system’ in contravention of the provisions of the law. ³¹

In keeping with the view that law should be technology neutral, thus Section 3(2) of the Information Technology Act, 2000 needs to be amended to provide that in addition to the procedure prescribed there in or that may be prescribed by the Central government, a security procedure mutually agreed to by the concerned parties should be recognized as a valid method of authentication of an electronic document / transaction during the transition period.

Banks may be allowed to apply for a license to issue digital signature certificate under Section 21 of the Information Technology Act, 2000 and function as certifying authority for facilitating Internet banking. Reserve Bank of India may recommend to Central Government for notifying the business of certifying authority as an approved activity under clause (o) of Section 6(1) of the E-Banking Regulations Act, 1949.

Section 415 to 420³², detail the law relating to cheating. In the case of Internet Scams relevant sections relevant sections relating to the crime of cheating such as cheating by impersonation (section 416)³³ cheating with knowledge that wrongful loss may ensure to person where interest if offender is bound to protect (section 418)³⁴, etc. may be applied according to the facts of the case.³⁵

Section 40A(3) of the Income Tax Act, 1961 recognizes only payments through a crossed cheque or crossed bank draft, where such payment exceeds Rs. 20000/-, for the purpose of deductible expenses. Since the primary intention of the above provision, which is to prevent tax evasion by ensuring transfer of funds through identified accounts, is also satisfied in case of electronic transfer of funds between accounts, such transfers should also be recognized under the above provision. The Income Tax Act, 1961 should be amended suitably.

The Consumer Protection Act, 1986 defines the rights of consumers in India and is applicable to banking services as well. Currently, the rights and liabilities of customers availing of Internet banking services are being determined by bilateral agreements between the banks and customers. It is open to debate whether any bilateral agreement defining customers rights and liabilities, which are adverse to consumers than what is enjoyed by them in the traditional banking scenario will be legally tenable. Considering the E-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. So, that the banks providing Internet banking may assess the risk and insure themselves against such risks.

Electronic Funds Transfer Act:

In 1995, the Reserve Bank had set up the Committee for Proposing Legislation on Electronic Funds Transfer and other Electronic Payments (Chairperson : Smt. K.S.Shere). The Shere Committee had recommended a set of EFT Regulations by the Reserve Bank under the Reserve Bank of India Act, m1934 and amendment to the Bankers’ Books Evidence Act, 1881 as short term measures and promotion of a few Acts like the Electronic Funds Transfer Act, the Computer Misuse and Data Protection Act etc. as long term measures. The Reserve Bank has already initiated steps for framing of EFT Regulations.³⁶ The Government of India have also initiated steps for promoting Information and Technology Act, 1999 and consequential amendments to the Reserve Bank of India Act, 1934, the Bankers’ Books Evidence Act, 1881 etc.

Admission of electronic files as evidence and preservation of records:

The Shere Committee had discussed the issues of admitting electronic files as evidence and of preserving electronic records and recommended the need to amend the Bankers' Books Evidence Act, 1881 on the lines of the Customs and Central Excise Laws (Amendment) Act, 1988 and Central Excise and Salt Act, 1944 for the purpose. It is learnt that Government of India is processing the draft Bill amending the Bankers’ Books Evidence Act, 1881. This is a welcome development and would meet the legal requirement of acceptance of contracts, documents etc. in electronic form as evidence.³⁷ The Committee considered certain provisions of the proposed Electronic Commerce Bill for admitting electronic records / signatures as evidence. Clauses 9, 10, 11, 12 and 14 of this proposed Bill which is relevant in this connection. ³⁸

Thus, this chapter systematize the laws prevail in India in simply manner. The Indian Government is aware of the positive and negative potential of the Information Technology, Indian Penal Code 1860, Indian Evidence Act (1872) and Criminal Procedure Code (1973). It is apparent that new laws have to be framed to handle the Cyber Crimes, the conartist and the intangible evidence thereof. The Reserve Bank of India has come up with in handling computer crimes under Electronic Fund Transfer Act and Rules, Amendment to the Reserve Bank of India, The-Banking Regulation Act, Bankers Book Evidence Act.

Necessary amendment has made in the Information Technology Act, 2000 towards the laws both legal luminaries and Cyber specialists are involved. The Indian experience in the actual functioning of the Information Technology is limited. Experience of the developed countries can be fully utilized by organizations which have developed expertise in this field are:

· Organization for European Cooperation and Development (OECD) has already issued a set of guidelines.

· The United Nation Organization has published a Crime Control Manual.

· Countries like US, UK, Germany, Japan, France etc, has framed laws to computer frauds,

CONCLUSION:

The IT revolution had a great impact in the Indian banking system. The use of computers had led to introduction of online E-Banking in India. The use of the modern innovation and computerization of the E-Banking sector of India has increased many folds after the economic liberalization of 1991 as the country's banking sector has been exposed to the world's market. The evolution of electronic banking products has made day to day banking operations faster and more efficient. The increased productivity gained through the use of electronic banking products has allowed businesses to do more with less. Businesses that do not use some form of electronic banking products will not grow.

The popular services covered under E-Banking are; Automated Teller Machines, Credit Cards, Debit Cards, Smart Cards, Electronic Funds Transfer (EFT) System, Cheques Truncation, Payment System, Mobile-Banking, Internet Banking, Telephone E-Banking, etc.

As we know each every coin has two sides, thus, E-Banking has a number of good impact or advantages along with number of defects. Advantages like, the operating cost per unit services is lower for the banks, it offers convenience to customers as they are not required to go to the bank's premises, there is very low incidence of errors, the customer can obtain funds at any time from ATM machines, the credit cards and debit cards enables the Customers to obtain discounts from retail outlets, The customer can easily transfer the funds from one place to another place electronically, etc.

Along with number of advantages, there are lots of disadvantages which create various security problems. This ultimately results that E-Banking is not safe. No, doubt Indian government took lots of steps through Reserve Bank of India; or through judiciary; or by enacting different areas of laws, but still exercising the system of E-Banking is not safe and day by day frauds in this area goes on rapidly. The main disadvantage of E-Banking is the security problems that surround it. It's a fact that making transactions online poses a much bigger risk compared to making transactions in a physical branch. This is due to the hacking problems and identity theft. Addition to these risks, technical difficulties could also arise. Sometimes the bank's website goes down, and if this happens it will be a hassle for the customer because he/she has to go to a branch or make phone calls, which are usually busy due to other customers also making a call. Another case that has happened was an unpredicted rise in customer that the servers of the bank were not able to cope with. A customer may also run into a bad service. Sometimes one might wait a while for checks to clear and certainly can't do anything about it if it is online.

These disadvantages of E-Banking system ultimately resulted to great challenges for security of the customer in India, such as:

· Government facing challenge of enacting proper regulation and legality, as because E-Banking system provides services to all over the world. Thus, it is tough for a country for regulatory authorities to enforce finance laws throughout the globe. Additionally, regulations differ from nation to nation and banks are not always proficient in the financial laws for every nation in which they have business.

· Customer facing security problem because of hacking into the bank's server in order to acquire bank account data, or a software glitch might cause the bank to unwittingly distribute personal data to the wrong person. From the statistical data it can be trace out that year by year fraud in this respect goes on. It’s a challenge for the regulator to control these E-Banking frauds, no doubt still now India there is number of provisions for proper regulation of this system.

· Another challenge such as governance and security has the potential to make a bank look bad to clients. Additionally, the more a bank relies on Internet banking, the more the bank may gain an impersonal feel. Both of these problems may discourage clients from choosing a bank that relies on E-Banking, regardless of how convenient E-Banking may be.

· A major challenge facing is related to legal risk. That is, Banks can potentially expand the geographical scope of their services faster through electronic banking than through traditional banks. In some cases, however, they might not be fully versed in the jurisdiction of local laws and regulations before they begin to offer services there, either with a license or without a license if one is not required. When a license is not required, a virtual bank—lacking contact with its host country supervisor - may find it even more difficult to stay abreast of regulatory changes. As a consequence, virtual banks could unknowingly violate customer protection laws, including on data collection and privacy, and regulations on soliciting. In doing so, they expose themselves to losses through lawsuits or crimes that are not prosecuted because of jurisdictional disputes.

· Other challenges like there are risks associated with onlin E-Banking that one should be aware of. Unfortunately, technology is never 100 percent reliable. One may have trouble connecting to the Internet. The bank's website may be temporarily down. If one has not left his time to get to the branch or contact it by phone, then the person are at risk of missing payment deadlines, which will result in penalty charges. OnlinE-Banking can also compromise one’s security and privacy. Hackers can obtain one’s account number or Social Security number and make unauthorized transactions on that person’s behalf. Someone may get ones security details if that person didn't close the browser window or if the password memorization feature is enabled for his bank's website.

Hence, there are ample numbers of challenges for regulating the system of E-Banking. It can be concluded that, E-Banking carry out a way to simplifies the work of bank and bank’s customers, along with it carry ample areas of problems or challenges; danger of security etc. Even we can trace out from the above work that, in a fraud case, bank always be in a safer side. In a judgment, State Consumer Redressal Commission stated that, net banking fraud is not bank fraud as because, bank already mentioned about the risks involved in net banking system in the security transaction. Even we can find that in the terms and condition of the bank there are specifically mention in each and every ground that bank is not responsible or liable.

Bank provides the system and bank itself is in a position, that no one can make the bank liable for any loss cause due to fraud. A person make an account in a bank for transact its money, having a trust and believe of security of his money by the bank. And at that time, the bank stated in one side that bank will take care of that money and in other side it stated that bank will not be liable for any E-Banking fraud. That, bank will not safe for money transaction.

So, there should be systematic guideline, rules and regulation, proper techniques, secured software for the bank who provides banking system. Legal frame work should be strong enough. Along with this, there should be proper penalty for the criminal and other member of the conspiracy and along with this; there should be proper relief for the victim. For that there should be specific, systematic, separate procedure and everything should be based on benefit of the customer only.

Thus the hypothesis has been proved as E-Banking is having both the aspect in respect of boon and bane to the society. E- Banking is really slow in its pace in India in comparison to the worldly picture and pace, thus giving a huge area for the laws and regulations to flourish in this field of technological revolution in India. In response to the rampant E- Banking frauds, the stringency of the regulation should cope to combat the illegality caused by it.

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8. ibid

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14. Electronic Banking Or Banking Over Electronic Medium, rules and regulation of internet banking, Available From: https://www.onlinesbiglobal.com/64BE/web/SBI/Disclaimer.htm.

15. Withdrawl Of Electronic Banking, rules and regulation of internet banking, Available From: https:// www.onlinesbiglobal.com /64BE/web/SBI/Disclaimer.htm.

16. Internet banking in India, guidelines, 14^th june 2001, Available From: http://rbidocs.rbi.org.in/rdocs/notification/ PDFs/21569.pdf.

17. Legal issues, Internet banking in India, guidelines, 14^th june 2001, Available From: http://rbidocs.rbi.org.in/rdocs/notification/ PDFs/21569.pdf.

18. Regulatory and supervisory issues, Internet banking in India, guidelines, 14^th june 2001, Available From: http://rbidocs.rbi.org.in/rdocs/notification/ PDFs/21569.pdf.

19. ibid

20. ibid

21. ibid

22. C Vidya; Cyber Crimes and Laws- An Overview; 2007; page no. 09

23. ibid

24. ibid

25. The Convention has had its detractors, however. Available From: http://crime-research.org/library/CoE_Cybercrime.html this paper focuses on the wide scope of powers accorded to the law enforcement agencies under the Convention.

26. C Vidya; Cyber Crimes and Laws- An Overview; 2007; page no.92

27. Section 17 The Indian Evidence Act, 1872

28. The Indian Evidence Act, 1872

29. Section 34 of the Indian Evidence Act, 1872

30. Section 35 of the Indian Evidence Act, 1872

31. Indian Information Technology Act, Available From: http://www.arraydev.com/commerce/JIBC/2006-04/gupta.HTM

32. Indian Penal Code, 1860

33. ibid

34. ibid

35. V.D.Dudeja; Cyber Crimes and Law- Crimes in Cyber Space – Scams and Frauds- Volume – I;2002, page no. 124

36. V.D.Dudeja; Cyber Crimes and Law- Crimes in Cyber Space – Scams and Frauds- Volume – I;2002

37. ibid

38. ibid

Received on 11.11.2014 Modified on 05.12.2014

Asian J. Management 6(1): January–March, 2015 page 53-60

DOI: 10.5958/2321-5763.2015.00009.8