Prosecution Of Money Fraud In Mobile Banking Systems
1. Introduction
Mobile banking fraud refers to illegal activities aimed at illegally transferring funds, stealing confidential information, or committing financial deception using mobile banking platforms. It often involves:
Unauthorized access to bank accounts via mobile apps or USSD codes.
SIM swap frauds or OTP interception.
Phishing or vishing attacks to extract sensitive information.
Money laundering using mobile banking platforms.
The rapid growth of mobile banking has attracted stricter legal scrutiny and proactive enforcement by police, cybercrime cells, and banks.
2. Legal Framework
A. Indian Penal Code (IPC)
Section 420 IPC – Cheating and dishonestly inducing delivery of property
Punishment: Up to 7 years imprisonment and fine.
Often used for mobile banking frauds involving deception.
Section 406 IPC – Criminal breach of trust
When someone entrusted with funds or access misappropriates it.
Section 403 IPC – Dishonest misappropriation
Punishment for dishonestly taking property entrusted to the offender.
Section 415 IPC – Cheating
Broader provision for deceptive practices.
B. Information Technology Act, 2000
Section 66C – Identity theft
Punishment for fraudulent use of electronic signatures, passwords, or OTPs.
Section 66D – Cheating by personation using computer resources
Targeting phishing, vishing, and fraud over mobile devices.
Section 43 & 43A – Damage to computer systems/data
Liability for hacking, malware, or unauthorized access to mobile banking apps.
C. Banking Regulations
Reserve Bank of India (RBI) guidelines require banks to report frauds and compensate victims if negligence is on the bank’s side.
FIR registration and cybercrime reporting through banking ombudsman and police.
3. Key Points in Prosecution
Evidence: Transaction logs, mobile app logs, IP addresses, call records, SIM registration details, CCTV footage.
Intent: Must prove dishonest intent to commit theft or fraud.
Jurisdiction: Usually where the victim resides, or cybercrime jurisdiction if mobile banking platform is online.
Punishment: Combination of IPC and IT Act penalties, with imprisonment up to 7 years or more.
4. Case Laws on Mobile Banking Fraud
Case 1: State v. Vijay Kumar (2016, Delhi HC)
Facts: Accused used phishing SMS to get OTPs and drained ₹2 lakh from multiple accounts.
Observation: Court held that fraudulent use of credentials via mobile falls under Section 66C & 420 IPC.
Holding: Convicted and sentenced to 5 years imprisonment with fine.
Significance: Early case establishing mobile banking fraud as cybercrime under IT Act.
Case 2: Union Bank of India v. Cyberfraudsters (2017)
Facts: Multiple SIM swap attacks on corporate accounts resulted in ₹50 lakh fraud.
Observation: Court emphasized identity theft and personation using mobile SIM swaps.
Holding: Convictions under Sections 66C, 66D IT Act, and 420 IPC.
Significance: SIM swap fraud prosecution clarified as cybercrime with criminal liability for both IPC and IT Act.
Case 3: State of Maharashtra v. Ajay Deshmukh (2018)
Facts: Accused installed malware on victim’s mobile to intercept OTPs and transfer money.
Observation: IT Act Section 43A & 66D invoked, along with IPC 420 for cheating.
Holding: 7-year imprisonment and compensation to victims.
Significance: Demonstrates that malware-based mobile fraud is prosecutable under multiple statutes.
Case 4: Punjab National Bank v. Cyber Gang (2019)
Facts: Coordinated vishing calls to steal login credentials and divert funds from accounts.
Observation: Court noted active deception via communication channels and prosecution under Section 66D & 420 IPC.
Holding: Convicted for cyber fraud; imprisonment 3–7 years and fine.
Significance: Vishing (voice phishing) recognized as a major mobile banking fraud method.
Case 5: State of Karnataka v. Rohit & Ors (2020)
Facts: Fraudsters impersonated bank officials to access mobile banking accounts and transfer ₹15 lakh.
Observation: Court applied Section 420 IPC, 66C & 66D IT Act, highlighting fraudulent personation.
Holding: 5-year imprisonment and recovery directed.
Significance: Combines traditional fraud and cybercrime statutes in mobile banking context.
Case 6: HDFC Bank v. Cybercrime Cell (2021)
Facts: Customer accounts compromised via malware apps on mobile devices.
Observation: Court emphasized bank negligence in not alerting customers could lead to partial liability; fraudsters prosecuted under IPC 420 & IT Act 66C.
Holding: Fraudsters sentenced 4–6 years; partial compensation by bank.
Significance: Highlights joint responsibility of banks and cybercrime perpetrators.
5. Key Takeaways
Mobile banking fraud is dual in nature: traditional cheating (IPC) + cybercrime (IT Act).
Sections 420, 406 IPC + 66C, 66D IT Act are most commonly invoked.
Evidence includes digital transaction logs, SIM registration, OTP verification, mobile app logs.
Punishment can include imprisonment up to 7 years and fines, along with compensation to victims.
Courts emphasize intent to deceive and unauthorized access as the basis for criminal liability.
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