RBI releases draft guidelines for customer liability in case of fraudulent transactions

RBI releases draft guidelines for customer liability in case of fraudulent transactions


RBI has clarified through its draft guidelines, that a customer will not be responsible for frauds occurred in any online transaction, from his/her account outside their control.  Any delay however, from the customer’s end in reporting the fraud within a period of 4 to 7 days about the fraud, would make the customer to pay a penalty of Rs. 5000 or the Transaction value whichever is lower.

It is noteworthy that the mobile banking transactions have touched Rs. 67 crores in June this year, against Rs. 61 crores in May.  The fraud related to prepaid instruments have touched Rs. 5347 crores in June against Rs. 4995 crores in May.  RBI has informed that the above decision has been taken keeping in mind the increased frauds in the recent days and also the push for Financial Inclusion by the Government.  RBI also opined that every customer is eligible to get 24×7 rights to use the multiple bank channels of communication in line with the other facilities viz Toll Free number, IVR and SMS in order to enable them to report frauds in time.  Also, it is noteworthy that the alerts for electronic banking transactions have been made mandatory, to enable the customers to get alerted about a fraudulent transaction without any delay.  In toto RBI release conveys that

  1. The customer will have Zero liability when the error is observed to be from the bank side
  2. The customer has informed about the fraud within three working days.
  3. The liability will be decided by the bank’s approved policy or its Board, if there is more than 7 days delay in reporting of the fraud.
  4. All problems should be resolved within 90 days and the bank should see that the customer does not lose out on interest in case of debit card or bear additional interest in case of Credit Cards.

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