Indeed it is a matter of high regret that cases of unauthorized electronic Banking Transactions are on the increase. RBI has hence proposed that customer will have no or zero liability in case of fraud being committed because of bank’s negligence or third breach.
However, RBI also adds that wherever there is Involvement of customer is established there will be no customer protection. This was stated by RBI in the release of notification CUSTOMER PROTECTION-LIMITING LIABILITY OF CUSTOMERS IN UNAUTHORIZED ELECTRONIC BANKING TRANSACTIONS. In cases where there is no clear recognition of customer involvement in any fraud, the customer’s liability will be limited to a maximum of Rs. 5,000 if the customer reports the fraud within 4 to 7 working days. A reporting made beyond 7 working days, the determination of the customer’s liability will be determined based on Bank’s Board approved policy. However, a feedback has been sought by RBI on this till 31st August 2016.
RBI further adds that the bank should ensure to credit the amount (known as Shadow Reversal made before the facts of the case is determined) involved in the unauthorized electronic transaction to the customer’s account within ten working days. Here RBI adds that the burden of proving the customer liability in case of unauthorized electronic banking transactions shall lie on the bank. Further proposals made by RBI are:
- The bank should ensure that a complaint is resolved within 90 days.
- In case of Debit Card/Bank Account the customer should not lose out on interest.
- In case of Credit Cards, customer should not be made to bear any additional burden of interest.
RBI has further added that the need for review of the criteria for determining the customer liability under the above circumstances, is warranted due to the increase in customer grievances related to unauthorized electronic banking transactions, which ultimately result in debits to the customer’s accounts or debits to their debit/card accounts. The requirement from the customers’ side is that they should compulsorily register for alerts for electronic banking transactions. Also it is proposed, that alerts shall be sent to the customers through different channels (email or SMS) offered by the banks.