RBI revised norms limit the liabilities of consumers for unauthorized electronic transactions in their bank accounts

Bank thefts are getting sophisticated by the day. Let alone retrieving your money, you can’t even get to know how it was stolen in many cases. Two weeks ago, several people complained about having lost money from their accounts after using an ATM in Kalkaji in Delhi. But police has yet to find out how the money was stolen as no prevalent ways such as a cloning device were used. Some customers even lost lakhs of rupees after using that ATM. Police suspect a gang might have hacked the machine’s computer system.

With new security threats emerging every day, customers must know how much liability the bank shares in cases of unauthorised transactions. In July, the Reserve Bank of India (RBI) had revised its norms to limit the liabilities of consumers for unauthorized electronic transactions in their bank accounts, establishing a safety net for the citizens amid the national drive toward digital transactions and rising incidents of fraud. Read below to know how much the bank and the customers are liable in cases of unauthorised transactions:

Zero Liability

A customer will be entitled to zero liability where the unauthorised transaction occurs in the following events—contributory fraud/ negligence/ deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer); third-party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorised transaction.

Limited liability

A customer will have limited liability for the loss occurring due to unauthorised transactions in the following two cases:

1. 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. Any loss occurring after the reporting of the unauthorised transaction shall be borne by the bank.

2. In cases where the responsibility for the unauthorised 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 after receiving the communication from the bank) on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be limited to the transaction value or the amount mentioned on the website of RBI,, whichever is lower.

Further, if the delay in reporting is beyond seven working days, the customer liability shall be determined as per the bank’s Board approved policy. Banks shall provide the details of their policy in regard to customers’ liability formulated in pursuance of these directions at the time of opening the accounts. Banks shall also display their approved policy in public domain for wider dissemination. The existing customers must also be individually informed about the bank’s policy.

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