In a move that will not only boost online transaction and use of plastic money in India, the Reserve Bank of India (RBI) has laid out norms to limit customer liability in online banking frauds.
The RBI directed banks in India to credit the amount involved in the unauthorised electronic transaction within 10 working days to the account holder.
“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/cards, the criteria for determining the customer liability in these circumstances have been reviewed,” RBI said in a notification in Mumbai.
In cases of zero and limited liability of the customer “on being notified by the customer, the bank shall credit the amount involved in the unauthorised electronic transaction to the customer’s account within 10 working days from the date of such notification by the customer (without waiting for settlement of insurance claim, if any)”, it said.
Banks may also at their discretion decide to waive off any customer liability in case of unauthorised electronic banking transactions even in cases of customer negligence, the notification said.
RBI also said that banks need to ask their customers to mandatorily register for SMS alerts and email alerts for electronic banking transactions.
“The SMS alerts shall mandatorily be sent to the customers, while email alerts may be sent, wherever registered. The customers must be advised to notify their bank of any unauthorised electronic banking transaction at the earliest after the occurrence of such transaction, and informed that the longer the time taken to notify the bank, the higher will be the risk of loss to the bank/customer,” it said.
Further, banks shall ensure that the resolution of a customer complaint does not exceed 90 days from the date of receipt of the complaint, and the customer is compensated as per provisions.
“In case of debit card/bank account, the customer does not suffer loss of interest, and in case of credit card, the customer does not bear any additional burden of interest,” it said.
RBI also noted that the customer should not delay in reporting of the fraud beyond seven days. “If the delay in reporting is beyond seven working days, the customer liability shall be determined as per the bank’s Board approved policy.”
Zero liability of a customer: A customer’s entitlement to zero liability shall arise where the unauthorised transaction occurs due to negligence/deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).
Third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorised transaction.
Limited liability of a customer: A customer shall be liable for the loss occurring due to unauthorised transactions in cases where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorised transaction to the bank.”
Any loss occurring after the reporting of the unauthorised transaction shall be borne by the bank.
“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 after receiving the communication from the bank) on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be limited to the transaction value or the amount mentioned, whichever is lower,” it said.