Legal steps to guard digital payments: 

Legal steps to guard digital payments: 

Context:

The Home Ministry has asked banks and e-wallet firms to furnish details of the extent of financial fraud reported in the past one year as digital transactions picked.

Introduction:

•  The use of mobile wallets and online transactions has spiked since demonetisation.
•  A high-level committee of the Ministry convened a meeting in this regard with the officials of banks, e-wallet firms and the Reserve Bank of India to understand the extent of technological misuse and financial frauds committed through digital means.

Meaning of Digitalization:

•  Digitalization is the integration of digital technologies into everyday life by the digitization of everything that can be digitized.
• Digitalization also means the process of making digital everything that can be digitized and the process of converting information into digital format.

Advantages of digitalization:

1. Increasing digital literacy and Internet access can lead to economic empowerment and reduce social inequality.
2. Good governance :Use of information technology can make government system more transparent and accountable, enhance efficiency in delivery of various services, simplify procedures, reduce leakages in subsidies and has potential to reduce corruption.
3. Growth: Digitization has a direct correlation with faster growth ,development and welfare
4. Employment to jobless

Challenges for Digitalization:

1. Low digital literacy
2. Lack of adequate infrastructure to protect data.
3. Cases of cyber crimes are rising
4. Many rural areas remains isolated from internet and cellular services
5. Women have comparatively poor access to online services, which widens the gender gap.
6. Poverty is one of the obstacle in digital development
7. A digital economy poses security risks like theft of  debit cards in India.

Cashless Economy

• Decreased reliance on liquid money . All transactions are done  by using cards or by digital means
• The people using the means of e-commerce, mobile banking or Internet banking for their purchase or for their transaction

Advantages of cashless economy:

Advantages for the society:

•  Reduces the circulation of liquid money
• The black money or parallel money cannot be able to sustain
• The transaction process and purchase will made easy
•  No need to carry cash. Just carrying the required cards or mobile banking will     suffice.
•  More sense of safety with a PAN protected card etc.
•  No fear of being robbed unlike carrying cash and letting everyone know that     there could be something worth snatching.
•  Now labour get their payment in their bank accounts therefore minimum wages as per Indian Labour Law can be ensured.

2.  Advantages for the economy:

•   Digital payments indirectly reduce expenditure in manufacturing currency notes and its transportation.
•  Electronic transactions also help in curbing corruption and black money flow which in ameliorate economic growth.
•   It becomes easier to determine how much was spent where, and one able to manage the budget.
•     Cashless economy increase transparency in the system

3.Advantages for the government:

•  The government can control the financial transactions in the society.
•  More    transparency and easy to track money laundering and other such activities.
• Helps to eliminate counterfeit currencies
• If the government finds a person guilty government can block his/her transaction.

Disadvantage of cashless economy:

•   Higher risk of identity theft
• Cashless transaction system is not widespread due to lack of education and technology gap which is a matter of concern and must be addressed by government or financial institutions.
•      Direct threat to cyber security and individual financial data.
•    Increase in online banking fraud.
•     As per the survey automation will cut 70,000 jobs in India.

Government schemes related to Digitalization:

•  The Digital India Programme is the flagship programme launched by the Government of India with a vision to transfer India into digitally empowered society and knowledge economy.
• The Unified Payments Interface (UIP)-the payment system that allows mobile-enabled money transfer between bank accounts is also a step towards digitalization of economy.
• The Bharat Interface for Money (Bhim app), the common app that can be used by anyone who has a bank account with a linked mobile number. Bhim provides a Smartphone front-end to make bank-to-bank payments.
• The government also unveiled two schemes –Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana for customers and trades alike to promote mobile banking and e-payments.
•  Finance minister Arun Jaitley proposed a slew of measures to hasten India’s movement to a cashless economy like ban on cash transactions more than Rs 3 lakh, tax breaks for the creation of a cashless infrastructure, greater usage of non-cash modes of payments and making Aadhaar based payments more widespread.
•  The budget proposed to ban all cash transactions above Rs 3 lakh, in line with the ·     Aadhaar pay, a merchant version of Aadhaar-Enabled Payment System (AEPS), will be launched soon to enable those who do not have debit cards, mobile wallets and mobile phones to make digital payments.

How is Government dealing with the Issue related to check crimes in financial sector?

• The Information Technology Act, 2000 has recently been amended to meet challenges in cybercrime, the amended Act is yet to come into force, it has introduced two important provisions that have a strong bearing on the legal regime for data protection.
• The Supreme Court said the introduction of a “carefully structured” data protection regime and its contours were matters policy matters to be considered by the Centre.
• The government has already indicated in the court that the committee would be framing a data protection Bill similar to the “technology-neutral” draft Privacy Bill submitted by an earlier expert committee led by former Delhi High Court Chief Justice A.P. Shah to the Planning Commission of India in 2012.

Ratan P.Watal committee on Digital Payment:

• The Committee on Digital Payments headed by Ratan P. Watal has submitted its final report to the Union Finance Ministry.
•  It was notified in 2016.
•  It was tasked to review existing payment systems in the country and recommend appropriate measures for encouraging Digital Payments.

Key recommendations:

•  The Committee has recommended medium term strategy for accelerating growth of Digital Payments in India.
•  It also recommends inclusion of financially and socially excluded groups and assimilation of emerging technologies in the market.
• It calls for need of safeguarding security of Digital Transactions and providing level playing to all stakeholders and new players who will enter this new transaction space.

CERT-In

The Indian Computer Emergency Response Team (CERT-In) is an office within the Ministry of Electronics and Information Technology. It is the nodal agency to deal with cyber security threats like hacking and phishing. It strengthens security-related defence of the Indian Internet domain. In March 2014, CERT-In reported a critical flaw in Android Jelly bean’s VPN implementation.

In December 2013, CERT-In reported there was a rise in the cyber attacks on Government organisations like banking and finance, oil and gas and emergency services. It issued a list of security guidelines to all critical departments