RBI in the year 2001 had issued guidelines on the recommendation of Working Group on Inter-net Banking covering the area of Information Technology, Security Standard, Legal Issue, Regulatory and Supervisory matters, the

The RBI as per regulation of banking business under its regulatory approach had advised the banks to follow the following instructions and the guidelines for having Inter-net Banking: - All banks are to take prior approval from RBI to offer internet banking services. Applications should be supported by business plan, cost benefit analysis, operational aspects and arrangements like technology adopted, business partners, service providers and systems and control procedures the bank proposes to adopt for managing risks along with their security policy duly certified by an independent Auditor certifying the compliance of meeting minimum requirements need to be submitted. After the initial approval, if there are any material changes then the banks will be required to inform RBI and will also need to inform every breach or failure of security systems and procedure. If necessary RBI would conduct a special audit/inspection. RBI guidelines on Risks and Controls in Computers and Telecommunications, will equally apply to internet banking. Wherever services are outsourced, banks would develop guidelines to manage risks arising out of such service providers, such as, disruption/ defective services, personnel of service providers gaining intimate knowledge of banks systems and mis-utilizing the same etc., effectively. In case of e-commerce transactions, they should follow guidelines regarding protocols for transactions between the customer, the bank and the portal and the framework for setting up of payment gateways. Further guidelines regarding Inter-bank payment gateways, connectivity security, contractual aspects between payee ad payee's banks, mandatory disclosures, hyperlink - security and other aspects are also covered as a part of internet guidelines of banks.