Moneylife Foundation's persistent battle for bank customers is beginning to bear fruit. The Reserve Bank of India (RBI) has issued a circular to reduce liability of customers in an unauthorised electronic banking transaction. The circular also asks banks to put in place a mechanism to record and address customer grievances or pay compensation in a systematic and timely manner.
RBI’s action comes after two days after a unique #TweetMorcha which appealed to the Prime Minister Narendra Modi with the hashtag #BankSeBachao. This was preceded by a persistent campaign for two months including an online petition that garnered over 2.14 lakh signatures, several complaints from customers, letters and memorandums.
Making banks responsible to prove liability of the customer in such cases, in the circular, RBI says, in case of contributory fraud or negligence or deficiency from the bank, the customer will have zero liability irrespective of whether or not she reports the unauthorised transaction. In case of third party breach, where there is no liability on bank or the customer, and the customer reports it to the bank within three days, then also she is entitled to zero liability, the Reserve Bank says.
"Taking into account the risks arising out of unauthorised debits to customer accounts owing to customer negligence, bank negligence, banking system frauds and third party breaches, banks need to clearly define the rights and obligations of customers in case of unauthorised transactions in specified scenarios. The burden of proving customer liability in case of unauthorised electronic banking transactions shall lie on the bank," it added.
In addition, banks are asked to credit the amount involved in the unauthorised electronic banking transaction to the customer's account within 10 days from reporting by the customer.
RBI has also asked bank to put in place a mechanism to handle communication related with electronic banking and to resolve customer grievances within stipulated time.
Reserve Bank says, banks must ask their customers to mandatorily register for SMS alerts and email alerts, if available, for electronic banking transactions. Banks also must advise customer to report any unauthorised electronic banking transaction at the earliest, RBI says, adding, "To facilitate this, banks must provide customers with 24x7 access through multiple channels (at a minimum, via website, phone banking, SMS, e-mail, IVR, a dedicated toll-free helpline, and reporting to home branch) for reporting unauthorised transactions that have taken place and/ or loss or theft of payment instrument such as card."
"Banks shall also enable customers to instantly respond by 'Reply' to the SMS and e-mail alerts and the customers should not be required to search for a web page or an e-mail address to notify the objection, if any. Further, a direct link for lodging the complaints, with specific option to report unauthorised electronic transactions shall be provided by banks on home page of their website. The loss or fraud reporting system should also ensure that immediate response (including auto response) is sent to the customers acknowledging the complaint along with the registered complaint number. The communication systems used by banks to send alerts and receive their responses must record the time and date of delivery of the message and receipt of customer’s response, if any, to them. This will be important in determining the extent of a customer’s liability. The banks may not offer facility of electronic transactions, other than ATM cash withdrawals, to customers who do not provide mobile numbers to the bank. On receipt of report of an unauthorised transaction from the customer, banks must take immediate steps to prevent further unauthorised transactions in the account."
This also means customers need to provide mobile number in case they want to use electronic banking services, other than use of ATMs.
Moneylife Foundation, along with Sanjay Nirupam, chief of Mumbai Regional Congress Committee and India’s leading bank union leaders, consumer organisations and activists had called a #TweetMorcha, a unique new form of registering an online protest to take up the issue of high bank charges. The aim of this Tweet Morcha was give voice to the anger of all those who are being forced to pay unfair bank charges and unjust fees and make it heard by the Prime Minister. All the tweets were tagged the Prime Minister Narendra Modi’s twitter handle @narendramodi.
The objective of this protest was to unite the voice of the agitated and vulnerable bank customers who are being subjected to unfair practices by big banks since the charges that banks are levying on their customers amount to being illegal.
An online petition launched by us on Change.org has garnered more than two lakh signatures. (Sign the Petition
). The first point in this online petition is about protecting customers in unauthorised banking transaction. It says, “We feel that with the increased use of digital payments post the demonetisation drive, it is necessary to have in place a mechanism or system to protect customers from unauthorised banking transactions. A Master circular/notification by the Reserve Bank on limiting liability in an unauthorised banking transaction will make a huge impact on protecting customers from frauds.”
Here is the revised notification issued by RBI on limiting customer liability in electronic banking transaction...