Consumer Protection in E-Banking

This article scrutinizes to understand the rights of a consumer in an Electronic-Banking. The need and importance of consumer protection is expanding at a rate of knots especially in the Indian banking sector. We have encountered many incidents in the banking sector where the consumers are misled due to the failure of the bank’s operational capacities leading to the financial insecurity amongst the helpless customers. The article is an endeavor to spotlight the importance of knowledge protection in net banking and dwell upon potential legal recourses that can be adopted keeping in mind the present legal framework in an Asian country with regards to regulation of knowledge Technology.

A healthy banking system is very much needed for any economy striving to achieve good growth in an increasingly global business environment. The banking sector has undergone an intense transformation since the early 1990s. The modified operative atmosphere for the industry, underpinned by banking, liberation, and advances in data technology, has resulted in intense competitive pressure. Banks have more experienced this challenge by diversifying through change data Technology and modernization of the existing system. E-banking could be a revolution of the banking sector by data technology. Electronic Banking or E-banking refers to the utilization of technology that permits customers to access banking services electronically whether or not it’s to pay bills, transfer funds, read accounts, or to get data and devices.

Through such services the bank provides promoting info concerning banking products and services on a standalone server. It is a low degree of risk as there’s no affiliation between server and bank. In this Communicative Website technique, there’s less scope of communication between the banking industry and e-banking users.


Consumer protection is the follow of safeguarding consumers of products and services, and also the public, against unfair practices within the marketplace. Client protection measures are ordinarily established by law. Such laws are supposed to stop businesses from partaking in fraud or nominal unfair practices to achieve a plus over competitors or to mislead customers. They will additionally give further protection for the overall public which can be wedged by a product or is produced even once they do not seem to be the direct buyer or client of that product. As an example, government laws could need businesses to disclose careful data regarding their products particularly in Areas wherever public health or safety is a problem, like with food or vehicles.

This study mainly aims to identify the bank customer’s level of awareness concerning the four major e-banking delivery channels such as ATMs, internet banking, mobile banking, and credit card. The next objective is to identify how far awareness leads to the adoption of the same. Examining the influence of demographic and perceptual factors on the adoption of these delivery channels is the next objective. It also analyses the user’s different experiences and their level of satisfaction in using these e-banking delivery channels.

Electronic banking may be a type of banking during which funds are transferred through Data Technology exchange of electronic signals instead of Data Technology exchange of money, checks, or alternative forms of paper documents. Transfers of funds occur between money establishments like banks and credit unions. They additionally occur between money establishments and industrial establishments like stores. Whenever somebody withdraws money from an automatic teller machine (ATM) or pays for groceries employing a charge account credit (which attracts the number owed to the shop from a savings or checking account), the fund’s are transferred via electronic banking.

Consumer Internet Banking, with it, is the ability to achieve every nook and cranny of the planet, holds importance for a nation like an Asian country, wherever standard Banking services are out of reach for an outsized proportion of the plenty. However, to form it a hit, it needs over associate degree adequate net enabling infrastructure. There’s a dire want for associate degree adequate legal and regulatory framework to place into place. One of all the crucial parts of such a Legal and regulatory framework is going to be information Protection provisions. The stress of this text is on this facet of knowledge protection within the electronic banking sector.

Law cannot probably be expected to stay pace with changes in technology. The recent debacle of virtual paraphilia has brought out, amongst different things, the inadequacy and vulnerability of the laws governing the use of the net. Fixing liability, recording, and reproducing proof, ascertaining jurisdiction are issues that show very little sign of easing. The issues over security and misuse touching on the e-banking activity are mounting as an additional bank in Asian countries obtrude upon electronic banking.

E-banking activities involve not banks and their clients, however, varied third parties too. Data control by banks concerning their customers, their transactions, etc change hands many times. It is not possible for banks to retain data entirely at intervals on their Pc networks, coupled with one jurisdiction is not possible. Risks about discharge, change of state, or interference of knowledge are sufficiently high to warrant adequate legal and technical protection. The Asian country has no law on information protection leaving a law governing a neighbourhood as specific as protection of knowledge in electronic banking. Data security in e-banking presents Two main Areas of risk: preventing unauthorized transactions and maintaining the integrity of consumer transactions. Information protection falls within the latter class.

Data protection laws primarily aim to safeguard the interest of the individual whose information is handled and processed by others. ‘Interests’ are sometimes expressed in terms of privacy, autonomy, or integrity. Information protection laws are ‘framework laws’ providing rather subtle general rules for such processes and creating allowances for developing careful norms as and once the requirement arises. Such legislation generally regulates all or most stages of the info protection cycle together with registration, storage, retrieval, and dissemination of non-public information. Information protection legislation of an outsized range of states, like Austria, Ireland, Japan, Luxembourg, Kingdom of Sweden, and also the United Kingdom cowl solely machine-driven processing practices.

Data Protection refers to the set of privacy laws, policies, and procedures that aim to minimise intrusion into one’s privacy caused by the collection, storage, and dissemination of personal data. Personal data generally refers to the information or data which relates to a person who can be identified from that information or data whether collected by any Government or any private organization or an agency.

The Constitution of India does not patently grant the fundamental right to privacy. However, the courts have read the right to privacy into the other existing fundamental rights, i.e., freedom of speech and expression under Art 19(1)(a) and right to life and personal liberty under Art 21 of the Constitution of India. However, these Fundamental Rights under the Constitution of India are subject to reasonable restrictions given under Art 19(2) of the Constitution that may be imposed by the State. Recently, in the landmark case of Justice K S Puttaswamy (Retd.) & Anr. vs. Union of India and Ors., the constitution bench of the Hon’ble Supreme Court has held the Right to Privacy as a fundamental right, subject to certain reasonable restrictions.

The Indian Information Technology Act, 2000, primarily a framework law, makes hacking a punishable offense beneath Section 66. Breach of knowledge security is implicitly recognized as a penal offense within the kind of hacking. The appropriate government (central/state) is authorized to declare any ‘computer’, ‘computer system’, or ‘computer network’ as a protected system. A 10-year time and a hefty fine expect somebody World Health Organization secures access to the ‘secured laptop system’ in dispute of the provisions of the law.

The Information Technology Act, 2000 (hereinafter referred to as the “IT Act”) is an act to provide legal recognition for transactions carried out utilizing electronic data interchange and other means of electronic communication commonly referred to as “electronic commerce”, which involve the use of an alternative to paper-based methods of communication and storage of information to facilitate electronic filing of documents with the Government agencies.

Electronic Banking In India

In India, a Bank’s liability would arise out of contract as there is no statute to the point. When liability is contractual it means that the bank is, under the contract, under an obligation to keep customers’ data secret. If transactions are being done on an open network such as the internet then in case of a security breach, an internet service provider (ISP) may be liable, in addition to the bank. Though ambiguity persists as regards liability of an internet service provider due to dearth of decided case law on the point.

The viability of sectoral legislation on information protection in e-banking ought to be gauged. Asian nations will take a cue from nations that have favoured the unexpected enactment of sectoral laws over omnibus legislation.

From the past few decades, the run has concerned in strengthening the fiduciary relationship between the banks and also the customers because it holds the responsibility of maintaining the money health within the Indian banking sector. The constant time run includes a major duty to increase powerful shopper confidence amongst the general public by guaranteeing the soundness and also the safety within the Indian industry.

When previous works of runs are derived, we can note its efforts in introducing the Banking Ombudsman (“BO”) theme 2006. BO is associate ‘Alternative Dispute Resolution Mechanism for resolution the disputes between a bank and its customers. However, the Indian Banking Sector is at the same time exposed to numberless legendary and unknown risks and uncertainties like cybersecurity breaches, phishing/ vishing frauds, information thefts, misuse of information, information privacy breaches, malware attacks, etc. whereas it’s legendary that these risks exist, the garb within which they manifest, once and at what severity, is unknown. During this background, the role of the investigator has become difficult as there’s a rise within the range of complaints, their complexity, besides because of the ability to agitate the dynamic money surroundings.

When we bump into the recent initiatives of run in shopper education and protection, we discover the formulation of the ‘Charter of client Rights’ which incorporates five basic rights of bank customers. They Are:

  • Right to Fair Treatment
  • Right to Transparency, Fair and Honest Dealing
  • Right to Suitability
  • Right to Privacy
  • Right to Grievance Redress and Compensation

Also, the run has done an outstanding job by fixing the client Service Department in 2006 to act because of the nodal department within the run for grievance redressal of complaints received from the general public. The department is renamed as the shopper Consumer Education and Protection Department (CEPD) and continues to specialize in providing grade taking part in the field between suppliers and customers of economic services, by easing the imbalances arising from data irregularities, inadequate disclosures, and unfair treatment.

An important milestone in strengthening the grievance redressal mechanism out there to bank customers was the institutionalization of the Internal Ombudsman (“IO”)mechanism in 2015 all told public sector banks, elect non-public sector and foreign banks. Now, the coverage of the “IO” theme is extended to all or any regular industrial banks (other than Regional Rural Banks) having ten or a lot of banking shops in the Asian nation. The target of fixing the “IO” is to confirm that associate undivided attention is given to the resolution of client complaints in banks and also the customers of banks get associate freelance and auto-review of their grievances that are part or whole unaddressed before they approach the BO.

On the opposite hand, recently on the twenty-four Gregorian calendar month, the 2019 run launched a software package application known as Complaint Management System (“CMS ”) to effectively support the investigator framework 2006. Now, the voters will access the CMS portal at run’s website to lodge their complaints against any of the entities regulated by RBI. With the launch of CMS, the process of complaints received within the offices of Banking Ombudsman (“BO”) shopper Education and Protection Cells (“CEPCs”) of the run has been digitalized.

The Pros And Cons Of Electronic banking

Pros of Electronic banking-

Despite the rising virtual presence of ancient banks, online-only competitors still supply some clear benefit for customers.

Better Rates, Lower Fees

The lack of great infrastructure and overhead prices enable direct banks to pay higher interest rates or annual share yields (APYs) on savings. the foremost generous of them supply the maximum amount as Chronicles to twenty over you will earn on accounts at a conventional bank- a gap which will very add up with a high balance. whereas some direct banks with particularly generous APYs supply solely savings accounts, most of them supply alternative choices as well as high-yield savings accounts, certificates of deposit (CDs), and no-penalty CDs for early withdrawal.

You’re less doubtless to be dinged with a good variety of fees at an on the spot bank as well as those related to keeping associate degree accounts open with an occasional balance, creating direct deposit is, or paying by check or open-end credit. Accounts at direct banks are additional doubtless to hold no minimum balance or service fees.

Better on-line Experiences

Traditional banks finance heavily in raising their virtual presence and repair, as well as launching apps and upgrading websites. However, overall, direct banks seem to retain a grip once it involves net banking expertise.

A 2018 Bain and Company survey of retail banking customers found ancient banks lagged behind direct banks within the Areas that mattered most to customers, as well as the standard of the banking expertise and also the speed and ease of transactions.

Cons of net Banking

Banking with a web establishment additionally has its share of drawbacks and inconveniences.

No Personal Relationships

A traditional bank provides the chance to urge to understand the workers at your native branch. which will be a plus if and once you want further money services, like a loan, or once you need to build changes to your banking arrangements. A managing director typically has some discretion in dynamic the terms of your account if your personal circumstances modification, or in reversing a compulsory fee or charge.

Less Flexibility With Transactions

In-person contact with a banking employee is not solely regarding reaching to grasp you and your finances. for a few transactions and issues, it’s valuable to go to a bank branch.

Take, for instance, depositing funds-the most elementary of banking transactions. Depositing a check is feasible with a right away bank by mistreatment. It is a banking app to capture each the front and back of the check. However, depositing money is downright cumbersome at several on-line banks. So, it is price checking the bank’s policy if this is often one thing you propose to try and do often. International transactions may be tougher, or perhaps not possible, with some direct banks.

The Absence of Their ATMs

Since they lack their banking machines, on-line banks place confidence in having customers use one or additional ATM networks like those from All Point and Cirrus. whereas these systems supply access to tens of thousands of machines across the country-even around the world-it is price checking the out their machines close to wherever you reside and work.

Check, too, for any fees you’ll rack up for ATM use. whereas several direct banks supply free access to network ATMs or can refund any monthly charges you incur, there Are generally limits on the number of free ATM transactions you’ll build in an exceedingly given month.

More restricted Services

Some direct banks might not supply all the great money services that ancient banks supply, like insurance and brokerage accounts. ancient banks generally supply special services to loyal customers, like most well-liked rates and investment recommendations at no additional charge.

Besides, routine services like notarization and bank signature guarantee do not seem to be out there on-line. These services Are needed for money and legal transactions.


The primary purpose of this Article is to recapitulate and summarize a number of the important points mentioned throughout the analysis work and to focus on the rising issues within the context of shopper protection in Net in an Asian country. As already mentioned within the introductory chapter, this work is primarily a belief, critical, and associate degree empirical study on the subject of “Jurisprudence of E-Commerce and shopper Protection in India: A appraisal with Special relation to the Data Technology Act, 2000. In an exceedingly wide sense, ‘Jurisprudence’ is employed to explain the legal connections of any body of information.

Therefore, with a read to allow the impact to the current aim of Jurisprudence, this analysis work is targeted on the interdisciplinary analysis of the law with commerce whereby the role of law has been analyzed in net e-Commerce for the protection of shoppers. Within the era of the latest spectrum of technological advancements, info Technology has opened new vistas for contemporary day business transactions. As a result of fashionable info and Communication technology, in the lap of the net revolution, the economy has revolutionized from B-Commerce (Bania Commerce) to E-Commerce (Electronic Commerce). 

The ‘E-Revolution’ has placed virtually the whole commercialism universe on the Net that has to display new threats to humanity. Because the aspects of the market have remodeled from physical to digital market therefore as the modes of searching have additionally been remodeled whereby rights of shopper’s are under numerous threats. This analysis work is focused typically on the new challenges displayed by E-Commerce and notably on the frauds associated with shoppers in Internet E-Commerce at the time of on-line searching, e-contracting, and e-banking.

There has been a transformation across the banking and monetary sector in India within the last 10 years, the key credit that is due to the knowledge process and Communication Technology, normally referred to as IT. it’s modified the means within which banking business is being done nowadays. Bankers Are currently convinced that to ‘create and retain a client is the key to reach this competitive market. Thus, banks refocus on their core plus the client. it’s modified the complete state of affairs of client bank relationships, adding growth to bank business and convenience to customers. Technology has already helped in providing numerous delivery channels to customers. 

The customers now do not have to be compelled to go within the bank for his or her regular banking wants. The options Are several to travel to the closest ATM or the closest internet-enabled laptop for access to their account or they will use their mobile handsets for banking transactions. automation has reduced the time interval in banking transactions. A cheque currently deposited gets cleared quickly.

Frequently Asked Questions (FAQs)

  1. Who is responsible for the liability of the loss occurred in electronic banking?
  2. Is Electronic Banking Safer than Physical banking?
  3. Are Electronic banking Portals Safe for payment?
  4. Is any of my personal information stored in the Online Banking product?
  5. What is electronic banking and why is it important?


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