Protect Bank Consumers from Frauds or be prepared for disaster..A warning to BJP Government

Naavi has been arguing from a long time that Banks are vicariously liable for Cyber Crimes in which customers lose money. It is under this argument that in the S.Umashankar Vs ICICI Bank case, the adjudicator of Tamil Nadu held the Bank liable. Subsequently, Mumbai adjudicator came to the same conclusion in several cases.

Now I am glad that more people are echoing the same view. Here is a good article on the subject in Indian Express written by an IPS officer Mr Arun Bothra. (See article here).

Mr Bothra has rightly argued that in case of ATM and other Bank frauds, it is the failure of Bank’s security systems that should be recognized and held responsible.

(Naavi has placed his arguments in detail in many articles in this website and one can find these articles if a search is made within the site. Or click here).

However, cyber crime victims who have tried to prove their case in a judicial system have been repeatedly frustrated by the powerful Banks as the following developments indicate.

1. The Chennai Adjudicator Mr P W C Davidar who held ICICI Bank responsible in several cases was transferred out of the department as soon as Ms Jayalalitha took over as CM. Subsequent adjudicators have not made any moves to hear further cases.
2. The Mumbai adjudicator who decided many cases against Banks was transferred to Delhi by the current BJP establishment and since then Mumbai adjudication system has gone quiet.
3. In Bangalore where two cases came up before the Adjudicator, he went a step ahead of the others by declaring that no case can be filed against a Bank under Section 43 of ITA 2000/8 since Bank is a “Company” and the section applies only to a “Person”.
4. The Cyber Appellate Tribunal which ought to hear appeals against adjudications has been literally shut down since the Government both in the earlier regime under Kapil Sibal and the present regime under R S. Prasad are unwilling to appoint a chair person since 2011.
5. Karnataka High Court is reluctant to intervene for reasons better known to it.
6. The IT Ministers, PMs, Presidents and the CJIs in the last several years who have come and gone or are presently in charge have all been contacted by the undersigned and none of them have been able to get the Cyber Appellate Tribunal functional.

All this indicates that there could be a huge conspiracy to deny the Cyber crime victims in Banks from getting justice through the system.

Mr Modi and the BJP Government who are tying to push through the Digital India agenda are unable to ensure at least the presence of a Cyber Judicial System though we understand that  they cannot guarantee justice in the end.

The situation is very depressing and would qualify for a low rating of the country in Cyber Security Index or Human Rights Index.

Now more frauds are getting reported from the new generation banking systems and RBI is not even bothered to collect the right statistics nor force the Banks implement  the RBI guidelines either on Cyber Insurance or on Information Security.

Mr Arun Jaitely as FM as well as Mr Raghuram Rajan as Gov, RBI  donot seem to have any appreciation for the plight of the E-Banking customers and are busy with inflation control, fiscal deficit control, re-capitalization of Banks to meet Basle III norms, re-engineering the NPA figures etc. Both of them are unmindful of the possibility that once the frauds cross a critical level, Bank customers would shun E Banking and start using cash once again as the medium of exchange. There could be a run on the Banks and the Indian Banking system may collapse.

Yesterday I was having a discussion with Ms Melissa Hathway the Cyber Security expert in USA who has worked under both presidents George Bush and Obama and found out that she does not trust E Banking and prefers not to use it.  On the other hand in India our regulators who donot even understand the risk of E Banking neither try to correct the system nor leave it to the discretion of the public to use E Banking or stay outside. The Government by policy imposes public to mandatorily use E Banking for Tax Payment, Direct Benefit Transfers etc and literally throws the citizens to the cyber criminals laps.

I have already brought to the notice of Mr Modi that if he does not introduce Cyber Insurance to protect the users of E-Banking/E-Governance, the Digital India program is under threat and may come down like a pack of cards one day. I am still waiting for him to read and understand the import of what I am saying.

I also draw the attention of these politicians and regulators the enclosed video which covers a recent debit card fraud scam busted (partially) in Bangalore. In particular I want them to see how people are feeling that “Plastic cards are not safe” which is an indictment of the system of E Banking.

It gives them some idea of how rampant is Bank frauds and why the statistics of RBI on Bank frauds is completely unreliable and why RBI and even the Government schemes may be more handy for Cyber Criminals rather than the public.

See the video here

I hope Mr Bothra’s article appearing prominently in Indian Express of 1st October 2015 will open the eyes of Mr Modi despite his busy schedule in Bihar.

Naavi