With the oncoming advance of the technology, the dependency on the digital platform, calls for robust legal framework on data protection and security. The Information Technology (IT) Act, 2000 in India is an initial step in legalizing the electronic governance and cybercrime prevention process. This paper seeks to analyse the effect of IT Act 2000 on data security and p protection, and its usefulness, particularly in reducing the incidence of cyber fraud in the banking sector even after the Act has been implemented. This paper attempts to evaluate the successes and challenges of the IT Act in tackling cyber fraud based on a sustained analysis of available literature, case studies and business statistics in order to make recommendations for the improvement of the legislation’s efficiency in the nowadays digital realm.