RBI issues Guidelines: Consumers to have 'zero liability' in cases of Credit Card or Online Fraud

July 7, 2017

All Banks have been asked to link mobile numbers with bank accounts.

Electronic payments have become much safer for the consumers with the Reserve Bank of India (RBI) introducing the new concept of 'zero liability' & 'limited liability' for the bank customers for any card/online fraud.The Central bank has also made it mandatory for all the banks to register all the customers for text message alerts & permit reporting of unauthorized transactions by way of a reply to the alert message.

This proposal to limit customer liability in a fraudulent transaction was given in a draft circular in August 2016. RBI has now come out with the final guidelines & sought to make rules stricter for bank.

Under this new directive issued on Thursday, the onus has been placed on the banks to link mobile no. with bank a/c.

The RBI said that "Considering the recent surge in customer grievances relating to unauthorized transactions; the customer liability in such circumstances has been reviewed."

Central bank's circular covers the online transactions as well as the face-to-face transactions in stores using electronic payments.

Besides asking the banks to enable replies to the text messages containing transaction alerts, the Reserve Bank of India has asked them to allow reporting of unauthorized transactions on their home page. Also reporting fraud'll be possible through many other channels including phone banking, call centre, sms, email & interactive voice response.

A customer''ll have zero liability in respect of a fraudulent transaction if there's contributory fraud/negligence on the part of the bank.

The customer'll also not be liable if there is a 3rd party breach, without bank's any involvement, which is reported to the bank within 3 working days of receiving communication regarding the unauthorized transaction.

Where the loss is due to customer's negligence, like sharing password, the RBI said the customer'll bear the entire loss until he reports such unauthorized transaction to the bank.

Similarly, where the loss is caused by a 3rd party, the customer'll be liable for the transaction value if he fails to report the fraudulent transaction within 4 to 7 days of receiving the alert from the bank.

However, the max. liability of the customer in the case of the above 2 transactions will be ₹5,000 for basic savings bank account. For most other accounts, it will be ₹10,000.