RBI PUTS ONUS OF ONLINE LOSS ON CUSTOMER

THE BURDEN OF PROVING CUSTOMER’S LIABILITY WOULD LIE ON THE BANK

The RBI last Thursday said that the customer will have to bear the entire loss of unauthorised Internet and mobile banking or ATM transactions if it happens due to customer negligence like sharing his or her payment credentials. The burden of proving customer liability in case of unauthorised electronic banking transactions will lie on the bank. The Reserve Bank in a circular also defined cases where there will be zero liability and limited liability on customers in case of loss. The RBI said considering recent surge in customer grievances relating to unauthorised transactions resulting in debits to their accounts/cards, the criteria for determining the customer liability have been reviewed. There will be “zero liability of a customer” in case of third party breach where the deficiency lies “neither with the bank nor with the customer but elsewhere in the system”. “In cases where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorised transaction to the bank. Any loss occurring after the reporting of the unauthorised transaction shall be borne by the bank,” said RBI.