In an attempt to curb the payment fraud, the Reserve Bank of India on Thursday imposed a cap on the customer liability in case of any unauthorised electronic banking transactions.
Customers will not suffer any loss if money withdrawn from their accounts through unauthorised electronic banking transactions by third-party fraudsters is reported within three days, the RBI said.
The RBI has also mandated banks to credit the amount involved in the customer’s account within 10-days. In case, the third party fraud is reported with a delay of four to seven working days, a customer will face a maximum liability of up to Rs 10,000 in the case of savings bank account and up to 25,000 in the case of credit card limits of over Rs 5 lakh.
“The longer the time taken to notify the bank, the higher will be the risk of loss to the bank/customer,” the RBI added.
While issuing revised directions on ‘Customer Protection – Limiting Liability of customers in unauthorised electronic banking transactions’, the RBI said that any loss occurring after reporting of the unauthorised transaction will be borne by the bank.
“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 or cards, the criteria for determining the customer liability in these circumstances have been reviewed,” the RBI said.
In the case of a third party breach, where the deficiency lies neither with customer nor with the bank but lies elsewhere in the system then a customer will be entitled to zero liability. Entitlement to zero liability will also arise where the unauthorised transactions occur due to contributory fraud/negligence/deficiency on the part of the bank irrespective of whether or not the transaction is reported by the customer, the RBI stated.
The central bank has further stated that banks must ask customers to mandatorily register for SMS and e-mail alerts, for electronic banking transactions.
“Though the RBI guidelines is in the interest of customers, it is equally important for customers to remain vigilant and report unauthorised transactions immediately to the bank by the fastest mode and take acknowledgement of the same,” said AC Mahajan, chairman of Banking Codes and Standards Board of India.