In order to ensure protection of customers from electronic frauds or forged transactions such as unauthorised and fraudulent electronic banking transactions in the country, the Reserve Bank of India (RBI) on Thursday said money of customers suffering any loss from such fake transactions will be credited in the accounts concerned within ten days of the incident, only if these unauthorised electronic banking transactions are reported to the concerned bank within three days.
With the increased thrust on financial inclusion and customer protection, and considering the recent surge in customer grievances relating to unauthorised transactions resulting in debits to their accounts and cards, the RBI has undertaken a review of criteria for determining customer liability. The move came after the review that there was a need for strengthening of systems and procedures.
On such fake transactions, in case the third party fraud is reported with a delay of four to seven working days, a customer will face liability of up to Rs 25,000. However, in cases where the loss is due to negligence by the account holder such as sharing of payment credentials, the customer will bear the entire loss until the unauthorised transaction is reported to the bank.
“There will be zero liability of a customer in case of third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system,” the RBI said.
Also, the bank said the revised directions are being issued amid recent surge in customer grievances relating to unauthorised transactions resulting in debits to their accounts/cards. “Any loss occurring after reporting of the unauthorised transaction will be borne by the bank,” it said, while issuing revised directions on ‘Customer Protection - limiting liability of Customers in Unauthorised Electronic Banking Transactions’.
“The maximum liability of a customer will be Rs 25,000 in cases where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the customer, but lies elsewhere in the system and when there is a delay of four to seven working days,” the RBI said in its notification.
“If the fraud is report after seven days, the customer liability will be determined as per the bank’s Board approved policy. The maximum liability of a savings bank account customer will be Rs 10,000 in such cases,” it added.
Referring to reversal timeline for zero or limited liability of customer, the RBI said the bank should credit shadow reversal the amount involved in the unauthorised electronic transaction to the customer’s account within 10 working days of reporting of the fraud.
This has to be done without waiting for settlement of insurance claim, if any, the RBI added.
It further said banks must ask their customers to mandatorily register for SMS alerts and wherever available register for e-mail alerts, for electronic banking transactions. “The SMS alerts shall mandatorily be sent to the customers, while email alerts may be sent, wherever registered,” it added.