Cyber Laws and Banking Frauds with Special Reference to Private and Public Sector Banks in Indian

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1 Website: (ISSN: -, Volume, Issue, September 0) Cyber Laws and ing Frauds with Special Reference to Private and Public Sector s in n Debasree Saha Research Scholar, Sunrise University, Alwar (Raj.) Debasrees@gmail.com Abstract: Large volume of data with speed and accuracy is virtually impossible without the use of information technology and internet. ing and financial services are no different. However, due to heavy dependency on electronic and digital tools to carry out business and payment transactions, a serious threat has also been imposed to the safety and reliability of financial operations. Along with the growing trend of online and cyber transactions, the number of banking scams, a strong legislative protection has become the need of the hour. Frauds with online payments, ATM machines, electronic cards and net banking transactions have become a serious issue. Huge loss of money of people and institutions is caused every year due to these cyber frauds in banking firms, even after tight security measures in electronic transaction. s themselves have been found to be in fraudulent practices in a big way, causing their customers enormous losses. This study is an effort to review and analyze the subject in legal perspective in n context with a comparative touch between private and public sector banks in the country. Key Words: Cyber Fraud, ing, Transaction, Sector. BACKGROUND In mid 0 s, saw an impetus in globalization and computerization, with more and more nations computerizing their governance, and e-commerce seeing an enormous growth. Until then, most of international trade and transactions were done through documents being transmitted through post and by telex only. Evidences and records, until then, were predominantly paper evidences and paper records or other forms of hard-copies only. With much of international trade being done through electronic communication and with gaining momentum, an urgent and imminent need was felt for recognizing electronic records. As the Information and Computer Technology has made its reach into almost every sphere of life. The world has been witnessing a growing trend of using online transactions, digital data transfer, electronic database and so many business, social and other activities based on computers, internet and information technology tools. Close to,000 cases related to credit/debit cards and net banking were reported during April- December 0. As per the data made available by the Reserve of,,0 and, cases related to ATM/credit/debit cards and net banking frauds were reported by the banks during 0- and 0- (up to December 0), respectively. As per the cyber crime data maintained by National Crime Records Bureau (NCRB), a total of, and, cyber crime cases (which includes cases reported under the IT Act, 000 and related sections of n Penal Code (IPC) and Special and Local Laws (SLL) involving computer as medium/target) were reported during 0 and 0, respectively. ing, insurance and financial organizations are the prime users of internet and online transactions. They make use of such technology to transfer cash, make payments, submit account information and other kinds of remittance services. But, at the same time, cyber threat is a big issue. Online transactions and data are not free from being attacked or manipulated. Cases of fraudulent cash withdrawals, account information hacking, data theft and credit/debit card scams have remarkable association with electronic systems in banking business. Today, maximum information being online, are highly susceptible to be attacked by cyber criminals. Cyber fraud cases in banks have become quite common which cause heavy loss of money to the customers every year. Cyber crime can be described as any criminal activity done using computers and the Internet. This includes anything from illegally downloading files to stealing millions of rupees from online bank accounts. The Information Technology Act, 000, was thus passed as the Act No. of 000, got President assent on June and was made effective from October 000. Being the first legislation in the nation on technology, computers and ecommerce and e-communication, the Act was the subject of extensive debates, elaborate reviews and detailed criticisms. As a result, the Information Technology Amendment Act 00 was placed in the Parliament and passed without much debate, towards the end of 00.. OBJECTIVES OF THE STUDY The current study aims at:. Introducing the concept of cyber crimes in banks. Presenting the relevant law available. Making meaningful analysis of the data belonging to banking cyber frauds of different banking sectors 0

2 Website: (ISSN: -, Volume, Issue, September 0) Research Method However, electronic and online data processing leaves plenty This study has used secondary data published by Reserve space for manipulations. The Reserve of (RBI) has of and has been redesigned to suit the research recently published the detail of cyber frauds (frauds relating to study. Suitable tables and graphs have been used for ATMs/Debit Cards/ Internet ing and Credit Cards) in comparative analysis. The study is a review kind of work Scheduled Commercial s. Table- shows this detail as based on the chronological information related to the title. under: Though, the titled work puts a comparative analysis between Table-: private and public sector banks, foreign banks have been put in a different category in order to know their share in fraud Cyber Crimes in Scheduled Commercial s in from 00-0 cases, even though they belong to private sector only. (In Rs. lakhs). LITERATURE REVIEW Selected literature has been scanned in order to find out the work done by research professionals, scholars and organization. Beirstaker, Brody, Pacini (00) suggested various techniques such as fraud vulnerability reviews, fraud policies, telephone hotlines, employee reference checks, vendor contract reviews and sanctions, analytical reviews (financial ratio analysis etc.), password protection, firewalls protection, digital analysis and other forms of software tools to detect and control frauds. Gupta P.K. (00), in the study Internet ing in Consumer Concerns and Strategies tried to identifys the weaknesses of conventional banking and explores the consumer awareness, use patterns, satisfaction and preferences for Internet banking vis-à- highlighed the vis conventional form of banking and also factors that may affect the bank s strategy to adopt Internet banking. It also addressed the regulatory and supervisory concerns of Internet banking. Ashu Khanna, Bindu Arora (00) in their survey based work A study to investigate the reasons for bank frauds and the implementation of preventive security controls in n banking industry done to find out the attitude of and measures taken by bank employees/ managers in controlling banking cyber crimes observed The bank employees do not give due importance to the problem of frauds. The awareness level of bank employees regarding bank frauds is not very satisfactory, and majority of them do not dispose favorable attitude towards RBI procedures as they find difficulty in following them due to workload and pressure of competition. Hemraj Saini, Yerra Shankar Rao & T.C.Panda (0) in their study Cyber-Crimes and their Impacts: A Review have described the problem and kinds of cyber crimes with their effects on different segments the society in general. B. Singh (0) in their report Online ing Frauds In has observed that Cyber crimes in are on rise thanks to the growing use of information technology. With limited numbers of cyber law firms in, these cyber crimes are not reported properly. Even the cyber security of is still catching up with the present requirements.. DISCUSSION AND ANALYSIS Reserve of (RBI) is the regulatory body over banking in. It keeps close eye on the banking operations. Sl. No. Calendar Year Total cases reported Figure-: Graphical Presentation of Table Involved (Lakhs).. 0 Interpretation: The table and chart show reducing number of reported cases. The amount is also reducing, but the year 0 shows an increase. The number of cases fell by.%,.% and.% in the year 00, 0 and 0 respectively. The amount also came down by.0%,.% in 00 and 0 respectively, but in 0 it rose by % Comparative Analysis The data have been analysed to reveal comparative status of fraud cases in terms of numbers and amount. The study focuses two kinds of comparisons. i. intra sector (banks within same sector) comparison and; ii. inter banking (between sectors) comparison.

3 Website: (ISSN: -,, Volume, Issue, September 0) i. Inter ing Sector Comparative Analysis s belonging to the same sector, i.e. public, private, and foreign sector have been presented in different tables along with their data in terms of number of cyber crime cases and their monetary values. S. No. Table- Deatail of Calender Year wise Cyber Frauds Name 0 0 No. Amo No. Amo No. Amo No. Amo of unt of unt of unt of unt Cas invol Cas invol Cas invol Cas invol es ved es ved es ved es ved Allahabad. Andhra of Baroda of of Maharashtra of Rajasthan Canara Central of Corporation Dena FIRSTRAND BANK IDBI Limited n n Overseas Oriental of Comm. Punjab National 0. SBBJ State of Hyderabad State of 0 State of Indore State of Mysore State of Patiala State of Travancore Syndicate UCO in Public Sector s ( in lakh) Union of United of 0.. Vijaya Grand Total 0. Interpretation: It can be observed from table- that the numbers of fraud cases in public sector banks were small but they rose during the four years period with a small drop in 0. The amount had no relationship with this fall and had a rising tendency. In year 00, PNB recorded the highest number and amount of cyber crime cases followed by IDBI bank. In 00, PNB showed highest number of cases followed by IDBI, but amount wise, PNB was followed by Andhra, Union of and IDBI respectively. IDBI crossed PNB in 0 in terms of cases, but amount wise, n Overseas, PNB and of Patiala witnessed a substantial rise. In 0, IDBI came on top followed by Corporation and PNB. In terms of money, IDBI, of Maharashtra and PNB recorded highest positions respectively. Fifure- also describes the story. S N Figure- Graphical Presentation of Table- Table- Deatails of Calender Year wise Cyber Frauds in Private Sector s ( in lakh) Name Axis Develop ment No. of No. of Cas es 0 0 Amo No. Amo No. Amo No. unt of unt of unt of invol Cas invol Cas invol Cas ved es ved es ved es Amo unt invol ved. 0.

4 Website: (ISSN: -,, Volume, Issue, September 0) Credit Dhanlax mi Limited..0.0 Federal 0.. HDFC ICICI IndusInd... Jammu & Kashmir... Karur Vysya. Kotak Mahindr 0 a.... Lakshmi Vilas South n Tamilna d Mercanti le The Royal of Scott. Grand Total Interpretation: Data of table- reveals that private sector banks had the largest share in banking cyber frauds not only in number of cases but also in terms of money. But the noticeable point is their falling trend. The number of cases came down from 00 in 00 to in 0. Similarly the amount also came down from. lakhs in 00 to 0. in 0, but it again rose to 0. in 0. However, overall a declining trend has been observed in cyber frauds in private sector bank. ICICI bank had a highest position in cyber frauds during this four years period showing a very high number of cases and large money. HDFC and Axis s followed the position respectively with a sudden rise in value by Axis in 0. This can be easily understood by Figure-. S. No Figure- Graphical Presentation of Table- Table- Cyber Frauds in Foreign s (Calendar Year wise Detail) ( in lakh) Name American Express ing Corp. Barclays Plc Citibank N.A Deutsche ( Asia ) No. of Cases

5 International Journal of Advanced Research Foundation Website: (ISSN: -, Volume, Issue, September 0) Hongkong & Shanghai ing Corporation Standard Chartered Grand Total Public Figure- ing Sector wise 0 Foreign Private Interpretation: The status of cyber crime cases in foreign bank can be observed from table-, which shows that cyber frauds are there in such banks to a great extent. Even after somewhat declining trend, the year 0, like in case of public and private sector banks, has shown a rise in number and amount of fraud cases. The table also shows that HSBC, which had the largest share in 00, has corrected the situation up to 0 while two other leading banks Citibank and American Express have surpassed HSBC. Figure- portrays the same.. Figure- Graphical Presentation of Table-... No. of Cases 0 0 Interpretation: If look at Figure-, which portrays the number of fraud cases from 00 to 0, it is obvious that private sector banks have gone far away recording very large number of cases. Foreign banks are no different either. Monetary loss wise also both kinds of banks have made a bad picture. However, public sector banks demonstrate very nominal number of cases. But, a substantial drop has been noticed in the cases in both, private and foreign banks, which suggests major and stricter check over the operations. Figure- ing Sector wise Involved (in lakhs). Public Foreign Private ii. Inter ing Sector Comparative Analysis ing cyber fraud data of public, private and foreign sector banks have been depicted in Figure- and Figure- respectively. 0 0 Monetary involvement in fraud cases has been shown in Figure-. Here also both private sector banks and foreign banks are much ahead of public sector banks. After a declining trend up to 0, the value again ascended in 0.

6 Website: (ISSN: -, Volume, Issue, September 0). FINDINGS AND CONCLUSION Titled study showed a bigger share of private and foreign banks in frauds related to online banking, ATM, cards and other digital banking transactions. Even with the reducing number of cases, the value of such cases did not come down proportionately. ing cyber frauds in the country are the result of introductory phase of banking technology like ATM, online banking, mobile banking, EFT etc. which need time for people, market and technology to get matured. Legal and regulatory framework also gets stronger by experience. Recently RBI has issued guidelines suggesting measures and reporting methods of cyber fraud cases to be followed by the banks. REFERENCES []. Gupta, P. K. Internet ing in Consumer Concerns and Strategies. Global Journal of Business Research, Volume, Number, (00). []. Khanna Ashu. and Arora Bindu., A study to investigate the reasons for bank frauds and the implementation of preventive security controls in n banking industry. Int. J.Bus. Sci. & App. Mgmt., Volume, Issue, (00). []. Saini Hemraj, Rao Yerra Shankar and Panda T.C., Cyber-Crimes and their Impacts: A Review, IJERA ISSN: -, Vol., Issue, Mar Apr (0), pp Retrieved from []. B. Singh, Online ing Frauds In, Report. Retrieved from March, (0) at : am []. Kelly, B. J., Preserve, Protect, and Defend. Journal of Business Strategy, 0(): - (). []. Sharma, B.R. (00). Frauds- Prevention & Detection. Universal law Publishing Co. Pvt. []. Siddharth Tak. Cyber frauds raise their ugly head yet again, Zee Research Group. Retrieved from again_.html []. Arun Prabhudesai. Cyber Fraud Statistics in n s: ICICI Leads., (0). Retrieved from []. Sayantanee Choudhury. Article, ATM frauds on the rise. Retrieved from TNN Feb, 0, 0.AM IST [0]. Gupta, Ankur. Data Protection in Consumer E-banking, Journal of Internet ing and Commerce. () (00) []. National Crime Record Beauro (NCRB)