The recent increase in unauthorized transactions in banking has led the Reserve Bank of India to release draft guidelines for customer liability in case of fraudulent transactions. According to the draft norms, the bank customer shall not be liable to pay for any fraud transactions made through his account due to third party breach or bank’s negligence.
The customer shall have no liability if the crime is reported within three days. However, if reporting is delayed by 4 to 7 days, customer will be liable to pay Rs 5000 or the transaction amount whichever is lower. For any delay of more than 7 days, banks will have the authority to decide liability according to their policies approved by the bank’s board.
RBI is currently working on a regulatory mechanism to address customer grievances and liability issues arising out of frauds in electronic transactions. According to Deputy RBI Governor, SS Mundra, complaints related to unauthorized fund transfers, phishing E-mails aimed at extracting personal information, fraudulent withdrawals from ATMs using duplicate cards, etc. have increased manifold in recent times. The criteria to determine customer liability has therefore been reviewed by RBI to ensure customer protection.
In an effort to effectively deal with customer grievances, 24/7 access to banks through IVRS, SMS and toll free numbers has been made easy. Also, the mandate has made it necessary for the banks to report all such fraudulent cases along with other necessary data like volume and aggregate value involved to the bank’s boards. All such cases shall later be reviewed by the Standing Committee on Customer service in each bank.