LIABILITY OF CUSTOMERS IN UNAUTHORISED ELECTRONIC BANKING TRANSACTIONS

The electronic banking transactions can be divided into two categories:

  • Remote/ online payment transactions (transactions that do not require physical payment instruments to be presented at the point of transactions e.g. internet banking, mobile banking, card not present (CNP) transactions), Pre-paid Payment Instruments (PPI), and
  • Face-to-face/ proximity payment transactions (transactions which require the physical payment instrument such as a card or mobile phone to be present at the point of transaction e.g. ATM, POS, etc.)

Banks must ask their customers to mandatorily register for SMS alerts and wherever available register for e-mail alerts, for electronic banking transactions. The customers must be advised to notify their bank of any unauthorised electronic banking transaction at the earliest after the occurrence of such transaction.  To facilitate this, banks must provide customers with 24×7 access through multiple channels (at a minimum, via website, phone banking, SMS, e-mail, IVR, a dedicated toll-free helpline, reporting to home branch, etc.)

Liability of Customer:

NIL Liability for the customer: where unauthorized transaction has occurred i) on account of deficiency/negligence of the bank or ii) Third party breach where the fault neither lies with the ban or the customer but within the system

Limited Liability for the Customer: i) In case where loss is due to negligence like sharing of credential, the entire loss will be borne by the customer till he reports the unauthorized transaction to the bank, any unauthorized transaction after that will be risk and responsibility of the bank, ii) in case the responsibility lies neither with the customer nor with the bank but customer takes four to seven working days, from receipt of information, in notifying the unauthorized transaction to the bank the customer liability will be as under:-

In BSBD Account                                                                                 Rs.5,000.00

All other Current/ Cash Credit/ Overdraft Accounts}

Credit cards with limit above Rs.5 lakh                          }         Rs.25,000.00

All other transactions                                                                       Rs.10,000.00

In case the unauthorized transaction, after receipt of information about transaction, is informed to the bank after seven days, the customer will be liable as determined by the Board approved policy of the bank.   The number of working days will be calculated as per working schedule of the home branch of the customer.

Burden of Proof: The burden of proving customer liability in case of unauthorised electronic banking transactions shall lie on the bank