Open Access Research Article
CYBER CRIME IN BANKING SECTOR
Published Paper
Article Details
CYBER CRIME IN BANKING SECTOR
AUTHORED BY - MAHESHWARI.S. PATIL
PROGRESSIVE EDUCATION SOCIETY’S
MODERN LAW COLLEGE,
GANESHKHIND,
PUNE-411007.
1.
ABSTRACT
Banking is today an integral part of our everyday life, At home; at
school at office, at business, on
travel everywhere we counter some aspect of banking. The significance of
banking in our day to day life is being felt increasingly. Banking
Industries is the backbone for any economy
& is the key indicator to see and analyze the level of development
of a country.With the paradigm shift
of Information Age, Computers have become the instrument through which criminal
acts are carried out as Technology
enabled crimes via internet. Net crimes are high-tech crimes as web connects people and devices across
globally. As technology grows, security on money is also a question mark. Artificial Intelligence
paves the way in fraud detection and banks should upgrade technology to combat cybercrimes. Banks rely on digital networking for their
ample business scope. This in turn,
aggravates the risk of banks and innocent customers to become victims of cybercrimes. Very common types of
cybercrime include online bank data
theft, identity theft, online predatory crimes and unauthorized computer access.[1]
Cyber-crimes
in the 21st Century has emerged to be one of the most lethal revengeful weapon that any person can use to threaten or
cheat someone. The active internet users as per the latest reports of January 2021 were around 4.66
billion and this growth has led to the increase in the chances of a user being trapped in this malicious method of
crimes which has been in surge during the past few decades.
Cyber-crimes pose a major challenge
in light of the fast-changing environment and the significant contribution of the IT industry.[2]
KEYWORDS: E-banking, Cyber-Crime, Banking Sector, Fraud,
Prevention.
2.
INTRODUCTION: -
The banking
system is considered almost as old as civilization and has existed in varied forms, and the banking system in India is
no exception to that. Before we deep dive into the evolution of banking in India, let’s take a look at the banking
scene in the world. The banking system
of a country upholds its economic development. Considering the economic
condition of people, the need for
financial services and the advancements in technology that followed, the banking sector in India has gone through
major transformations over the past five centuries. There you must understand the different types of
banking systems in India. Banking in India forms
the base for the economic development
of the country. Major changes in the banking system and management have been seen over the years with the advancement in
technology, considering the needs of people.[3]
3.
EVOLUTION OF BANKING SECTOR
The banking sector development can be divided
into three phases:
Phase I: The Early Phase which lasted
from 1770 to 1969
Phase II: The Nationalisation Phase which lasted from 1969 to 1991
Phase III: The Liberalisation or the Banking
Sector Reforms Phase which began in 1991 and continues to flourish till date.
Before the establishment of banks, the financial activities were handled
by money lenders and individuals. At
that time the interest rate were very high. Again there were no security of
public savings and no uniformity regarding loans. So as to overcome such problems the organized banking sector was established, which
was fully regulated by the govt. The organized banking sector works with in the financial system to provide loans,
accept deposits and provide other services to their customers.[4]
5.
MEANING
AND DEFINATION OF BANKING:
Banking can be defined as the business activity of accepting
and safeguarding money owned by other
individuals and entities, and then lending out this money in order to earn a
profit. However, with the passage of
time, the activities covered by banking business have widened and now various other
services are also offered by banks.
Indian Banking companies Act:
“Banking
companies is one which transacts the business of banking which means the
accepting for the purpose of lending
or investment of deposits money from the public repayable on demand or otherwise and withdraw able by cheque, draft
and order or otherwise”[5]
6.
FUNCTIONS OF THE BANK & IT’S THE IMPORTANCE:-
·
To provide the security to the
saving of customer.
·
To control
the supply of money and credit.
·
To encourage public confidence in the working
of the financial system, increase
savings, speedily and efficiently.
·
To avoid focus of financial
powers in the hands of a
few individuals and institutions.
·
To set equal norms and conditions (i.e. rate of interest, period of lending etc) to all types of customers.
In simple words, bank refers to an institution that
deals in money; this institution accepts deposits
from the people and gives loans to those who are in need. Besides dealing in
money, bank these days perform various
functions, such as credit creation
agency job and general service.[6]
4. STRUCTURE OF INDIAN FINANCIAL
SYSTEM:
A Financial
system functions as an intermediary between savers and investors. It
facilitates the flow of funds from
the areas of surplus to the areas deficit. It is concerned about the money,
credit and finance. These three parts
are very closely interrelated with each other and depend on each other.
A financial
system may be defined as a set of institutions, instruments and markets which
promotes savings and channels them to their most efficient
use. It consists of individuals (savers), intermediaries, markets
and users of savings (investors).
a.
Financial Institutions:
Financial institutions are the intermediaries who facilitate the smooth functioning of the financial system by making investors and
borrowers meet. They mobilize savings of the surplus units and allocate them in productive activities promising a
better rate of return. Structure of Indian
Financial System also provides services to entities (individual, business, government) seeking
advice on various issues ranging from restructuring to diversification
plans. They provide whole range Of
services to the entities who want to raise funds from the markets or elsewhere.
The financial Institutions is very important for the function
of a financial system.
Types of Financial
Institutions Financial institutions can be classified into two categories
• Banking Institutions
• Non-Banking Financial Institutions.[7]
b.Financial Markets
Financial markets
may be broadly classified as negotiated loan markets and open The negotiated
loan market is a market in which the lender and the borrower personally
negotiate the terms of the loan
agreement, e.g. a businessman borrowing from a bank or from a small loan company. On the other hand, the open
market is an impersonal market in which standardized securities are treated in large volumes. The stock market is an
example of an open market. The financial
markets, in a nutshell, the credit markets catering to the various credit needs
Of the individuals, links and
institutions. Credit is supplied both on a short as well as a long On the basis of the credit requirement for short-term
and long term purposes, financial markets are divided into two categories.
Types of the financial
market
• Money Market
• Capital Market.
[8]
c.Financial Instruments/ Assets/
Securities
This is an important component of the financial system. Financial instruments
are monetary contracts between parties.
The products which are traded in a financial market
are financial assets, securities
or other types of financial instruments. There is a wide range of securities in
the markets since the needs of investors and credit seekers
are different. Financial instruments can be real or virtual documents
representing a legal
agreement involving any kind of monetary value.
Equity- based financial instruments represent ownership
of an asset. Debt-based financial instruments represent a loan made by an investor to the owner of the asset.
Types of Financial
Instruments
• Cash Instruments
• Derivative Instrument [9]
d.Financial Services
It consists of
services provided by Asset Management and Liability Management Companies. They help to get the required funds and also make
sure that they are efficiently invested. They assist to determine the financing
combination and extend their professional services up to the stage of servicing of lenders.
Types of Financial Services
• Banking
• Wealth Management
• Mutual Funds
• Insurance
The Structure
of Indian Financial System is about A financial system is a system that system which allows the exchange of funds between
investors, lenders, and borrowers. Indian Financial systems operate at national and global levels. They consist of
complex, closely related services, markets,
and institutions intended to provide an efficient and regular linkage between
investors and depositors.[10]
8.
TYPES OF BANKS:
a. Commercial Banks
Any banking organisation that deals with the deposits
and loans of businesses
is referred to as a commercial bank.
Commercial banks issue bank checks and drafts
and accept term deposits.
Through instalment loans and overdrafts, commercial banks also serve as moneylenders.
Commercial banks also provide
a variety of deposit accounts,
including checking, savings, and time deposits.
These institutions are run for profit and are owned by a group
of people.
Commercial
Banks are further divided
into the following:
a.
Public Sector Banks - These are banks in which the
Government of India owns a majority stake. SBI, Bank of India, Canara Bank, and other
public sector banks are examples.
Private Sector
Banks - The majority of a bank's share capital is held by private individuals.
These banks are set up as
limited-liability corporations. Private sector banks include ICICI Bank, Axis
Bank, HDFC, and others.
b.
Regional Rural Banks - Regional Rural Banks were
established in accordance with the provisions of an Ordinance
promulgated on September
26, 1975, and the RRB Act, 1976, with the goal of ensuring adequate
institutional credit for agriculture and other rural sectors.
RRBs can only operate in the areas that have been designated by Gol as covering
one or more districts in the state.
RRBs are
jointly owned by Gol, the relevant State Government, and Sponsor Banks; the
issued capital of an RRB is divided among the owners in the proportions of 50%, 15%, and 35%, respectively.
c.
Foreign Banks - These banks are registered and have
their headquarters in another country, but they
have branches in our country. Foreign banks in India include HSBC, Citibank,
Standard Chartered Bank, and others.
b. Small Finance
Banks
The Small
Finance Bank (SFB) is a private financial institution that primarily undertakes
basic banking activities such as deposit
acceptance and lending to
unserved segments such as small
business units, small and marginal farmers, micro and small industries,
and unorganised sector entities, but
without any geographical restrictions, unlike Regional Rural Banks or Local
Area Banks.
c. Payment Banks
A payment bank is a distinct
type of bank that performs
only the limited
banking functions permitted by the Banking
Regulation Act of 1949.
Acceptance of deposits, payments
and remittance services, internet banking, and acting as a business correspondent for other banks are examples
of some oftheactivities.
They are initially permitted to collect deposits
of up to Rs 1 lakh per individual.
They can help with money transfers
as well as sell insurance
and mutual funds. Furthermore, they can only issue ATM/debit cards, not credit
cards.
They are not permitted to establish subsidiaries to provide non-banking financial services. More
importantly, they are not permitted
to engage in any lending
activities.
d. Co-operative Banks
A cooperative bank is a financial
entity that is owned and operated by its members, who are also its customers.
Co-operative banks are frequently formed by people who belong to the same local or professional community or who share a common interest.
Co-operative banks typically offer a wide range of banking and financial services
to their members
(loans, deposits, banking
accounts, etc).
It is further divided into:
a. Urban Cooperative Banks
b. Rural Cooperative Banks [11]
9.
CYBER CRIME:
Cyber crime
refers to the use of a computer to advance illicit activities like fraud, the trafficking of child pornographic material
and other intellectual property, identity theft, privacy invasions, etc. It entails spreading viruses, downloading files
unlawfully, engaging in phishing schemes, and stealing personal
data like bank account numbers,
etc. Thus, a crime can be identified as a “cyber crime” if “computer” and “internet” are among its
primary components. Because of this,
computer crimes are frequently used to refer to cyber crimes. The majority of cyber attacks
fall under the category of “economic crimes,” which are typically
carried out by highly organized criminals and employ the most cutting-edge technologies.
The number of
cases of financial fraud has risen along with the rate of innovation. Different methods
are being used by cyber criminals to gather bank information and conceal their funds. The banks
have employed a number of specific procedures to protect against these frauds,
yet the problem persists. This is
explained by the fact that the security measures currently available through banks are also available in public
or in other places where they can be exploited by cyber criminals who can simply breach
security measures.
Banking sector
has suffered an impact of cyber crimes. RBI has defined bank fraud has as, “A deliberate act of omission or commission
by any person, carried out in the course of a banking transaction or in the books of accounts maintained manually or
under computer system in banks, resulting into wrongful gain to any person for a temporary
period or otherwise, with or without
any monetary loss to the bank.” [12]
10.
ELECTRONIC CRIME IN BANKING
SECTOR:
Banking system
is the lifeblood and backbone of the economy. Information Technology has become the backbone of the banking system.
It provides a tremendous support to the ever –
increasing challenges and banking requirements. Presently, banks cannot think of introducing financial product Int. Electronic crimes are illegal activities
committed by means of computer end of the criminal activity
can be either a computer,
network operations. Electronic crimes are genus of
crimes, through computers and its networks. Electronic crime is a crime that is
committed online in several areas with e-commerce.
Computer is working as an instrument of the crime –
Banking criminals
are using various
electronic medium such as internet,
e-mail, and flash
encrypted messages etc to commit crime. This crime through computer
network takes place in the banking sector.
They are
·
Fraudulent use of Automated Teller Machine (ATMs) cards and accounts
·
Credit card frauds
·
Frauds involving electronic funds transfers (EFTs)
·
Telecommunication frauds
·
Frauds relating to E-commerce
and EDI
Actor of the
Banking Fraud
a. Money Mules:
As per the definition given by OECD report (2007),
money mules are individuals recruited
wittingly and often unwittingly by criminals, to facilitate illegal
funds transfers from bank accounts.
b. Victims:
Victims,
according to OECD (2007), in the banking sector can be categorized into
twocategories; banks and users of these banks. The users or customers
can be individuals, SMEs,or large multinational
organizations. The most negative externality among the legitimateactors is
created by individual users and
SMEs who do so by not employing risky online behavior or by not employing security
measures during transactions.
c. Security Guardians:
They are the
most important actor of this system as they improve the existing banking
systemand help in removing the
vulnerabilities and development of systems so that banking fraudscan be mitigated. The security guardians
in case of banking sector could be the bank itself orthe some third
party hired by the bank in order to ensure security from such threats.[13]
11. TYPES OF BANKING:
Banking is described
as the business carried on by
an individual at a bank. Today, several forms of banking exist, giving consumers
a choice in the way they manage their money most people do a combination of at least two banking types. However,
the type of banking a consumer uses
normally based on convenience. These are different types of banking through
which consumer can attach to it-
(a)Walk-in-Banking It is still a popular type of banking. As, in the past, it
still involves bank tellers and
specialized bank officers. Consumers must walk into a bank to use this service normally, in order to withdraw money
or deposit it, a person must fill out a slip of paper with the account
and specific monetary
amount and show a form of identification to a bank letter.
The advantage
of walk in Banking is the face to face connection between the banker and a letter. Also unlike drive thru and ATM banking, a
person can apply for a loan and invest money during a walk in.
a. TM Banking:
It is very popular because it gives a person 24 hour access to his bank
account. Walk in and drive thru
banking does not offer this perk. In order to use an ATM, a person must have an
ATM card with personal identification
number (PIN) and access to an ATM machine. Any ATM machine can be used, but charges apply if the ATM
machine is not affiliated with the bank listed on the ATM card. By sliding an ATM card into an ATM
machine, it is activated and then through touching buttons on the machine, a consumer is able to withdraw or deposit money.
b. Online Banking:
It allows a person to get on the internet and sign into their bank. This process
is achieved with the use of a PIN,
different from the one used for the ATM card. By going website of a bank and entering it, a consumer can get into his
account, withdraw money, deposit money, pay bills, request loans and invest money. Online banking
is growing in popularity because of its convenience. These different types of banking give a
consumer the power of choice and also give them a comfortable banking system that gives them a
convenient choice. Competition and the constant changes in technology and lifestyles have changed the face of banking. Now days, banks are seeking
alternative ways to provide and differentiate amongst
their varied services.
Customers, both corporate as well as retail, are no longer
willing to queue in banks, or wait on the phone, for the basic banking services. They demand and except a facility to
undertake their banking activities where and when they wish to do.
c. Real Time Gross Settlement System (RTGS):
RTGS is a system
where funds are transferred from one bank to another
on „real time? and on
„gross basis?.
RTGS transactions are carried through
either interbank or it can be between
customers through bank accounts. 'Real Time' means the processing of
instructions at the time they are
received rather than at some later
time; 'Gross Settlement' means the
settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). The transactions are settled individually in RTGS.
d. Mobile Banking:
The importance
of mobile phones for providing banking services has increased. We have become dependent on our mobile phones these days.
Because of the growth of mobile phone subscribers in India, banking services have been extended for the customers to
be availed through their mobile phones. Mobile banking is when transactions are carried out using a mobile phone by the customers that involve credit
or debit to their accounts.
e. Credit card and Debit Card :
Banks issue
debit cards that are linked to a customer’s bank account. Debit Cards can be
used to transfer funds only for domestic purposes
from one person to another
person. At present,
a customer can use his Debit
Card to withdraw money, know the monthly statement etc by using another
bank?s ATM, not being the ATM of the bank which issued
such debit card.12
12.
CYBER CRIMES
THAT ARE RELATED
TO THE
BANKING SECTOR:
a. HACKING
Hacking is a crime, which means an attempt
to bypass the security of the banking
sites or accounts
of the customers. The Hacking offence is not defined in the amended IT
Act, 2000. But under section 43(a)
read with section 66 of Information Technology (Amendment) Act, 2008 and under section
379 & 406 of Indian Penal Code,
1860, a hacker can be punished.
Canara Bank’s
ATM servers were the subject of a cyberattack in 2018. Several bank accounts
saw the clearing of twenty
lakh rupees. Sources
claim that 50 people were victims altogether as a result
of cybercriminals having access to more than 300 individuals’ ATM
information. Hackers used equipment
known as skimmers to obtain debit cardholders’ personal information. The value
of transactions containing stolen data ranged
from Rs. 10,000
to Rs. 40,000.
b. SPYWARE
The most common method
of stealing internet
banking passwords is spyware. Fake “pop up” advertisements
requesting users to download software are used to install it. Such software is identified and removed by antivirus
programmes, typically by preventing its download and installation before it can infect
the machine.
c. VIRUS
A virus is a
piece of software that corrupts an executable file and causes it to behave
strangely afterward. It spreads by
affixing itself to executable files, such as those used by operating systems and application programmes. The executable file can spread the infection
by being run. Worms, on the
other hand, are programmes that can duplicate themselves; they don’t change or
remove any files, instead, they just
grow and spread copies of themselves from the victim’s computer to other computers.[14]
d. CREDIT CARD FRAUD
Online credit
card fraud occurs when customers use their credit card or debit card for any
type of online payment and another
person, with malicious intentions, uses such card details
and password by hacking and misusing it for online
purchases using the customers’ hacked card details, or when a fraud is committed by a devil34. When
electronic transactions are not secure, the hacker can abuse the credit
card by pretending to be the cardholder.
e. DNS CACHE POISONING
By caching
previously received query results, DNS servers are put on a company’s network
to increase resolution response performance.
By taking advantage of a DNS software weakness, poisoning attacks are launched against DNS servers. Due to this,
the server improperly verifies DNS
replies to guarantee they are from reliable sources. Incorrect items will
eventually be cached locally by the server,
which will then serve them to subsequent
users who submit
the same request.
An attacker may utilise a server controlled by criminals to serve
malware to victims of a banking website
or to trick bank clients into giving their login information to a fake version
of a legitimate website. If a hacker
uses a specific DNS server to spoof an IP address and DNS entries for a bank website.
f. KEYSTROKE LOGGING
OR KEYLOGGING
Key logging is a technique used by scammers
to keep track of real keystrokes and mouse clicks.
The “Trojan” software packages known as keyloggers aim at the operating
system and are “installed” by use of a virus.
These could be especially risky because The scammer records
the user name,
password, and account
number, as well as any other inputted
characters.
g. PHARMING
Pharming is
related to “farming” and “phishing.” In phishing, an attacker takes control of
a bank’s URL so that when a customer
logs in to the bank website, they are forwarded
to a different website that is fake yet appears to be the real
website of the bank. Pharming takes place online, and ATMs can also be used for skimming.
A bank
management trainee was engaged to be married and the couple communicated via
email on the company’s computers.
This is the Bank NSP Case. After some time, they separated, and the young woman created some fictitious email
addresses, like “Indian bar associations,” and used them to send emails to the boy’s overseas clientele. She
utilised the bank’s computer for this. The boy’s
firm suffered significant customer losses and sued the bank in
court. Because the emails were sent through the bank’s technology, the court decided
to hold the bank accountable. [15]
13.
LEGAL PROVISIONS
Banking fraud
in India is not recognized as a separate offence, under the Indian Penal Code, 1860. Rather, different provisions of the
Indian Penal Code, 1860 are interpreted depending upon the facts of each case, which includes
Section 403 which deals with the dishonest
misappropriation of
property, Section 415 that deals with cheating, Section 405 that deals with
criminal breach of trust, Section 463
that deals with forgery and Section 477A that deals with the falsification of accounts.
Other statutes that contain provisions relating to Banking Fraud in India are:
·
The SARFAESI Act, 2002
·
The Negotiable
Instruments Act, 1881
·
Banking Regulation Act, 1949
·
Insolvency and Bankruptcy Code, 2016
LAW AND POLICY RELATED
TO BANK FRAUDS
Both the
Reserve Bank of India and the Government of India can devise a number of ways
to combat the threat of banking
fraud. These techniques can only be effective if they support the creation
of a more effective financial system. In reality,
inside the banking
system, fraud is one of the areas that need rapid attention.
Banking fraud can be simply defined
as an action including a combination of civil and criminal components that harms the public interest, public money, and the state exchequer.
THE INDIAN CONTRACT ACT, 1872
The term
‘fraud’ is defined under Section 17 of the Indian Contract Act, 1872. Any of
the following activities undertaken by a contracting party, their connivance, or their agent with the purpose of deceiving or encouraging
another party or their agent to join into the agreement are considered fraud. The situations leading to fraud have been provided hereunder:
·
The assertion as fact of something that is not true by someone who does not believe it is true.
·
The deliberate hiding of a fact by someone who knows or believes it.
·
A commitment made with no intention of following through.
·
Any other conduct
that is designed to deceive.
·
Any act or omission that is expressly declared fraudulent by the law.
THE INDIAN PENAL CODE, 1860
Even though ‘fraud’ is not
defined explicitly in the Indian Penal Code, 1860, provisions for cheating
(Sections 415 to 420), concealment (Sections 421 to 424), forgery
(Sections 463 to 477A), counterfeiting (Sections 489A to 489E), misappropriation (Sections 403 to 404), and breach of trust (Sections 405 to 409),
sufficiently cover the same.
Legal remedies and punishment for the offence
of fraud
i. Cheating
Section 419 of the Indian Penal
Code, 1860 provides an imprisonment of either description for a term which may extend to three
years, or with fine, or with both, as the deterrent for the offence
of cheating.
Offence of cheating is cognizable and non bailable. The trial is done by a magistrate
of first class.
FIR or Application can be filed under Section
156(3) and in case of private complaint
under Section 200 of the Code of Criminal Procedure, 1973.
ii. Concealment
Section 421 of the Indian Penal
Code, 1860 provides that dishonest or fraudulent removal or concealment of property to prevent
distribution among creditors will be accompanied by imprisonment of either description for a term which may extend to two
years, or with fine, or with both.
The offence is non-cognizable, bailable, triable by any Magistrate and compoundable by the credi- tor who are affected thereby
with the permission of the court.
iii. Forgery
Section 465 of the Indian Penal Code, 1860 provides an imprisonment of either description for a term which may extend to two years, or with fine, or with both, for the offence of forgery.
iv. Counterfeiting
Counterfeiting of bank notes or currency
notes under Section
489 A of the Indian
Penal Code, 1860, can cost the offender with an
imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall
also be liable to fine. The RBI Master Circular
on the same can be referred.
THE INFORMATION
TECHNOLOGY ACT, 2000
The
Information Technology Act of 2000 was adopted
by the Indian government to make ways for punishment and penalties for
computer-related frauds. In the case of unauthorised acts committed in respect of another person’s
computer system, such as access, downloads, or making copies of the information or data stored,
the introduction of a computer
contaminant or computer virus, damages to the computer or
its system, etc., Section 43 of the said Act provides for hefty damages
up to rupees ten lakhs payable by the offender
to the person affected. Furthermore, the aforementioned
Act makes tampering of computer source documents and hacking computer systems
punishable by up to three years imprisonment.[17]
14. REASONS
FOR ELECTRONIC CRIME:
Computers are
exposed, therefore, the law is mandatory to protect and safeguard them against cyber crime or electronic
crime. The reasons for the exposure of computers may as follows:
a. Competence to accumulate data:
The computer has exclusive characteristic of storing data in a very
comparatively small space this makes
the user more comfortable to steal the data either physically or virtually
through any electronic medium.
b. Unproblematic to Approach:
The trouble
encountered in guarding a computer system from unauthorized access is that
there is every opportunity of breach
due to the complex technology. By
secretly implanted logic bomb, key
loggers that can steal access codes, advanced voice recorders; retina imagers
etc that can fool biometric systems and bypass firewalls
can be utilized to get past many a security
system.
c. Complex:
The computers
effort on operating systems and these operating systems in turn are composed of millions of codes. Human mind is fallible
and it is not possible that there might not be a lapse at any stage. The cyber criminals take
advantage of these lacunas and penetrate into the computer system.
d. Negligence:
Negligence is
directly associated with human behavior. While protecting the computer system
it is possible there might be any
negligence, which change direction provides of the cyber criminal to gain access and control over the computer
system.
e. Loss of Proof:
Loss of evidence facts & figures is a very common obvious problem as
all the data are normally destroyed. This loss of evidences leads
to paralyses of the entire
computer system.[18]
15.
IMPACT OF CYBERCRIME ON BANKS
Finances the
banking industry across the globe is facing a challenging situation which is
thought provoking due to the geopolitical
and global macro-economic conditions. The banking sector is forced to evaluate its current practices
in order to analyze and manage their risks effectively. Technology-driven approaches have been adopted for the
management of risk. Due the growth of Information
and Technology (IT), penetration of mobile networks in everyday life, the
financial services have extended to
masses. Technology has made sure that banking services reach masses as it made these services affordable and
accessible (KPMG, 2011).However, this has also increased the risk of becoming targets of cyber attacks Cyber criminals
have developed advanced techniques to
not only cause theft of finances and finances but also to espionage businesses and access important
business information which indirect impacts the banks finances. In order to
fight these cybercrimes, the banking sector needs to collaborate with global authorities and watchdog organisations so that a model can be
developed which can help in controlling. There are many frauds and cyber crime digital era made in banking sectors and
dealing with such threats. The main issue
of concern here is that there is absence of effective compilation service in
the banking sector which can identify the trends in cyber-crime and compile a model according to it.
The spread of
mobile networks and the advancement of information and technology (IT) have
both led to the expansion of
financial services to the general public. However, technological innovation has increased the potential of being a
target of cyberattacks while also making banking services more accessible and affordable.
In addition to using advanced tactics to
steal money, cybercriminals are now
able to spy on businesses and obtain crucial company data, which has an
indirect impact on the bank’s profits. Furthermore,
cybercrime in the banking sector would violate the privacy of the customers.
Anyone, i.e., any hacker can misuse
the identity of people and threaten them to do illicit activity and steal their money.[19]
16.
PREVENTION OF CYBER-CRIME
·
Implementing strong corporate policies
that ensure proper protection of customer data.
·
Ensuring employee safety regulations and
implementing proper checks, including user account
verification, user login monitoring and password security
to bring in accountability.
·
Assigning a separate user to
each staff and prohibiting the exchange
of secure information.
·
Prohibiting employees from downloading and implementing any unauthorized software.
·
Ensuring proper approval protocols are implement.
·
Increasing tech support ensuring
proper firewall protection for all devices. This would block contacts
from any unauthorized domains.
·
Employee training: needless to say, at the end of the day, the processes are to be followed by the general employees of the bank,
and therefore continuous training focused on
improving the know–how
and possible legal
implications are vital.[20]
17.
CASE LAW RELATED TO CYBER-ATTACKS IN INDIA
A.
Cosmos Bank Cyber Attack
in Pune
Cosmos Bank in
Pune was the target of a recent cyber-attack in India in 2018, when hackers
stole Rs. 94.42 crores from Cosmos
Cooperative Bank Ltd situated
in Pune, it rattled the entire banking
industry in India. Hackers gained access to the bank's ATM server and stole
the personal information of rupee
debit cardholders and visas in large number. Money was wiped out, and hacker gangs from as many as 28 nations
withdrew the funds as soon as they were notified. It can be avoided by hardening surveillance measures and assisting approved individuals.[21]
B.
ATM System Hacked
The ATM
servers of Canara Bank was targeted in 2018 for cyber-attack. Twenty lakh
rupees were cleared from numerous
bank accounts. According to sources, cyber criminals had access to ATM information for more than 300 users,
resulting in a overall 50 victims. Hackers used skimming machines to capture
information from debit
cardholders. Transactions involving stolen information varied
in amount from Rs. 10,000 to Rs. 40,000. It can be avoided if the protection mechanisms in ATMs
can be improved to avoid
data misuse.[22]
C.
RBI Phishing
Scam
The Reserve
Bank of India was not spared by the fraudsters in a bold phishing attempt of
its kind. The phishing email, which purported to come from the RBI, promised the recipient prize money of Rs.10 lakhs within 48 hours if they clicked
on a connection that took them to a website
that looked exactly like the RBI's official website,
complete with the same logo and web address. After that, the user is asked to disclose personal details such as his
password, I-pin, and savings account number.
The RBI, on the other hand, issued an alert about the fake phishing e-mail on
its official website.[23]
D.
The
Bank NSP Case
In this particular case a bank management trainee was hitched to be married. Using the
company's computers, the couple exchanged
numerous emails. They had broken up their marriage after some time, and the young lady made some fake
email ids, such as "Indian bar associations," and used them to send emails to the boy's
international clients. She did this via banks computer. The boy's business lost a large amount of customers
and went to court against the bank. The court decided and made the bank liable
because the emails were sent using the banks system.[24]
18.
CONCLUSION:
Banks are the engines
that propel the financial sector’s
activities and an economy’s
growth. With India’s burgeoning banking industry, bank fraud is on the
rise, and fraudsters are getting more clever
and cunning. While it is impossible for banks to operate in a fraud-free
environment, proactive measures such
as risk assessments of operations and policies can assist them to mitigate the risk of fraud-related losses. As a
result, the time has come to address the banks’ security concerns on a priority basis. Poor hiring procedures and a lack
of adequate employee training are common
issues that banks are encountering, along with overworked employees, weak
internal control systems, and low
compliance levels among bank managers, offices, and clerks. However, technology may help governments,
regulatory bodies, and banks battle the increasingly sophisticated form of fraud by means of proactive forensic data
analysis and data mining techniques.
Cybercrimes
know no barriers and evolve at a pace at par with emerging technologies. The unprecedented growth of cybercrime and its
disastrous consequences is a very potent threat to banking and financial institution. It aims at building a vibrant
security preparedness among financial institutions, including banks. The unprecedented dependence on e banking
technologies at multifarious levels by billions pose a
great challenge before cyber experts in formulating a dependable cyber security
protocol.
During the
continual improvement of the technologies used at the financial institution's
backend, certain critical aspects
were ignored, which now require immediate attention. Cybercrime has its own range of appealing characteristics
that have increasingly begun to overshadow conventional crimes. Cybercriminals are attracted to the level of anonymity,
global victim reach, and quick outcomes, to name a few. Cyber criminals' job is made easier by the lack of/inadequate awareness campaigns. Owing to a lack of knowledge about the most recent
attack methodologies and documented preventive steps, unaware customers are easily fooled.
With the growing influence of cybercrime, it is becoming increasingly
clear that local law enforcement
agencies lack the requisite skills and resources to investigate incidents
involving cybercrime. Using trained cyber security experts
takes it a step further
in terms of obtaining faster
and more accurate
cybercrime investigation results.
It is believed
that after ensuring and estimating upon the proper checks on all the problems
and involving all the stakeholders to solve this major problems
relating to the technological
growth in the developing countries like India, these kind of risks as
mentioned in the research work can be minimised to a certain
extent and we can in a way ensure India to be digitally safe and secure.
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Article Information
CYBER CRIME IN BANKING SECTOR
Authors: MAHESHWARI.S. PATIL
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/05/02
- Volume 2
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
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