Report fraud in 3 days to avoid losses: RBI


In a bid to protect the customers from the menace of financial losses due to frauds, the Reserve Bank of India (RBI) has restricted the customer liability at Rs 25,000 if they report unauthorised transactions within seven working days.


“Customers can’t be made liable at all if they notify the bank within three working days of the transaction,” said RBI in an official communiqué.
As per the notification, these rules would be applicable for third party breach — where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system.
The central bank has revised the guidelines on customer liability in the account to recent rise in grievances relating to unauthorised transactions.
“The systems and procedures in banks must be designed to make customers feel safe about carrying out electronic banking transactions,” it said.


RBI has however given banks the freedom to decide customer liability if such transactions are reported after seven working days. The RBI has placed the responsibility of informing about the fraud on the customers, but the burden of proving it lies with the bank.

“The longer the time taken to notify the bank, the higher will be the risk of loss to the bank/ customer,” it said.
Banks will have to bear the burden for losses occurred due to contributory fraud and negligence on the part of the bank. For such cases, it will not make a difference whether or not the transaction is reported by the customer.

However, in case of negligence such as sharing payment credentials, customers will have to pay the entire loss until they report the transaction to the bank. Any loss occurring after the reporting shall be borne by the bank.
“Banks must ask their customers to mandatorily register for SMS alerts and wherever available register for e-mail alerts,” it said.

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