New Delhi: In a bid to limit customer liability in fraudulent credit card, online transactions, the Reserve Bank of India (RBI) on Thursday issued revised guidelines and has also sought to make rules stricter for banks in cases of frauds.
In case the third party fraud is reported with a delay of 4-7 working days, a customer will face a fine 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 unauthorized transaction is reported to the bank.
Any loss occurring after reporting of the unauthorized transaction will be borne by the bank, RBU said while issuing revised directions on “Customer Protection Limiting Liability of Customers in Unauthorized Electronic Banking Transactions”.
The RBI said the revised directions have been issued amidst recent surge in customer grievances relating to unauthorized transactions resulting in debits to their accounts/cards.
There will be “zero liability of a customer” in case of third party breach where the deficiency had “neither with the bank nor with the customer but lies elsewhere in the system”.
However, the customers will have to notify the bank within three working days of receiving the communication from the bank regarding the unauthorized transaction.
A customer’s entitlement to zero liability will also arise where the unauthorized transaction occurs due to “contributory fraud/negligence/deficiency on the part of the bank – irrespective of whether or not the transaction is reported by the customer, RBI said.
The maximum liability of a customer will be Rs25,000/- in cases where the responsibility for the unauthorized 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.
If the fraud is reported after seven days, the customer liability will be determined as per the bank board’s approved policy.
The maximum liability of a savings bank account customers will be Rs.10,000 in such cases.
Referring to reversal timeline for Zero Liability/Limited Liability of customer, RBI said the bank should credit – Shadow Reversal, the amount involved in the unauthorized electronic transaction to the customer’s account within 10 working days of reporting the fraud.
"This has to be done without waiting for settlement of insurance claim” the RBI said.
The RBI further said that 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” the RBI said.
The RBI has said that the burden of proving customer liability in case of unauthorised electronic banking transactions shall lie on the bank. However, you also need to be careful while doing any financial transaction so that you are not held liable for the loss occurring due to unauthorised transactions.