RBI fixes liability if your bank account is hacked

• With an increase in digital payments and net banking transactions, the threat of hacking and other types of online fraud has increased. The Reserve Bank of India (RBI), in its annual report 2017-2018, has made it clear as to who will bear the financial liability in case of all unauthorized electronic banking transactions. A framework has been established on limiting the liability of such bank customers.

• The RBI has already mandated banks to collect mobile numbers of customers so that SMS alerts are sent immediately after all electronic transactions.

• Whether the loss will be borne by the customer or by the bank depends on whose fault or negligence it is in the case. In all cases, customers are supposed to immediately alert their bank about any unauthorized banking transaction.

• The RBI says if a deficiency that led to the fraudulent transaction has been found to be on part of the bank then as a bank customer you do not need to worry at all as the entire loss will be borne by the bank and not by the customer. The customer’s liability is zero in this case.

• In cases where the loss is due to customer’s negligence then he will have to bear the entire loss until the unauthorized transaction is reported to the bank.

• In some cases, it may so happen that the fault lies within the system and neither the bank nor the customer is at fault. The customer’s liability will be zero if he or she reports it to the bank within 3 working days of receiving the communication from the bank about the unauthorized transaction.

• If the customer reports it with a delay of 4-7 working days then the maximum liability of the customer ranges from Rs 5,000 to Rs 25,000, depending on the type of account.

• If the customer reports it after 7 working days, the liability will depend on the bank’s policy. The bank is required to credit (shadow reversal) the amount involved in the unauthorized electronic transaction to the customer’s account within 10 working days from the date of notification by the customer.

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