RBI Limits Customer Liability in Online Banking Fraud

Laying out norms for limiting customer liability in online banking frauds, the Reserve Bank of India (RBI) on 06 July 2017 directed banks to credit the amount involved in the unauthorised electronic transaction within 10 working days to the account holder.

“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/cards, the criteria for determining the customer liability in these circumstances have been reviewed. In cases of zero and limited liability of the customer “on being notified by the customer, the bank shall credit the amount involved in the unauthorised electronic transaction to the customer’s account within 10 working days from the date of such notification by the customer.

Banks may also at their discretion decide to waive off any customer liability in case of unauthorised electronic banking transactions even in cases of customer negligence. RBI also said that banks need to ask their customers to mandatorily register for SMS alerts and email alerts for electronic banking transactions.

A customer’s entitlement to zero liability shall arise where the unauthorised transaction occurs due to negligence/deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).
A customer shall be liable for the loss occurring due to unauthorised transactions in cases where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorised transaction to the bank.

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