With increasing instances of unauthorized transactions in banking, the Reserve Bank of India (RBI) has proposed that customer will have no liability in case of fraud being committed because of bank’s negligence or third party breach. While in the case where a where customer’s own involvement is established, they will be liable, the RBI said in a draft paper.
In case where the involvement is not clearly established the customer liability will be capped at Rs 5,000 the RBI said. The complaint must be made to the bank in 4-7 working days. After seven days the customer liability will be determined based on bank’s approved policy.
On being notified by a customer, banks will credit the amount involved in the unauthorized transaction to the customer’s account within 10 working days. Banks may also, at their discretion, waive off customer liability even in cases of customer negligence.
However, the burden of proving customer liability in case of fraudulent transactions shall lie on the bank.
In May, minister of state for finance Jayant Sinha’s announced that the RBI is working on a regulatory mechanism for customers to address customer grievance and liability issues arising out of frauds in electronic transactions. “Complaints related to unauthorized fund transfers, fraudulent withdrawals from ATMs using duplicate cards, phishing E-mails aimed at extracting personal information etc. have witnessed manifold increase in recent times,” RBI deputy governor SS Mundra said.
State Bank of India (SBI), the country’s largest lender, has removed the option of loading money on all major wallets through net banking due to rising online frauds. SBI said that increased instances of vishing led SBI to take this step. Vishing is a type of online fraud where a scammer pretends to be a legitimate business and fools victims into divulging their net banking credentials.
Last week, a Romanian national was arrested in Kerala in a hi-tech ATM fraud where customers lost Rs 2.5 lakh. The modus operandi of the operation involved cloning numbers from a card manufacturing fake ATM cards with the data obtained and withdrawals from ATMs in Mumbai.
Similarly, in October 2015, Kotak Mahindra Bank detected a credit card fraud to the tune of Rs 2.84 crore which involved 1730 transactions carried out on 580 cards. The fraud was carried out by fabricating the cards and used for online shopping and making payments in seven countries.
NPCI’s database for wallets
Wallet players have approached the National Payments Corporation (NPCI) to build a database which assesses the risk of fraudulent transactions. The database will get an alert once a wallet receives a complaint or finds a transaction suspicious and will have other informaton such as the bank account used and location. The database will then alert other wallets to block the bank account and stop further transactions.