RBI limits customer liability in electronic bank transactions

The Reserve Bank of India announced a customer protection framework on July 7, reducing the customer’s liability to zero in regards with unauthorised electronic banking transactions as a result of contributory fraud, negligence or deficiency on the part of the bank, even if the customer does not report the transaction.
 
RBI also directed the banks that in case of dispute, that the customer complaints must be resolved and compensations must be paid within 90 days. While, if the banks are unable to abide by the 90 day period for complaint resolution and compensation, the banks will have to comply by the compensation rules specified by the RBI.    
 
Coming as relief to the customers, RBI provisioned the banks to prove the customers’ liability in cases of unauthorised electronic banking transactions, wherein any disputes emerges between the banks and the customers.    
 
The apex bank also made it mandatory for the banks to register their customers for text messages and email alerts for any electronic banking transactions.    
 
Further, RBI specified in its notification that in case of debit card or bank account, the customer must not suffer with a loss of interest and in case of credit card, the customer must not be burdened with any additional interest charges.    
 
The central bank also directed the banks to form a revised board-approved policy to aid customer protection on the RBI customer protection framework.    
 
In case of third-party breach in an unauthorised transaction, zero liability norm will be applicable for the customers if they report the transaction to the bank within three working days of receiving the communication from the bank. In the corresponding case, the bank will have to credit the amount involved within 10 working days from the date of customer’s notification.