POLICY ON CUSTOMER

PROTECTION-LIMITING LIABILITY
OF CUSTOMERS IN
UNAUTHORISED ELECTRONIC
BANKING
TRANSACTIONS
110110 SURAJ KUMAR
1 1 0 1 1 1 S WA M I J E E
1 1 0 1 1 2 S W AT I J A M U A R
1 1 0 1 1 3 TA N V I S I N H A
1 1 0 1 1 4 TA R U N K U M A R
 FLOW OF PRESENTATION

I. Introduction
II. Types of electronic banking transaction
III. Bank’s commitment to ensuring customer protection
IV. Reporting of unauthorised transactions by customers to bank
V. Liability of a customer
VI. Communication of policy
VII. Reversal timeline for zero liability
VIII. Reporting and monitoring mechanism
 INTRODUCTION
• Gone are the days of “Caveat Emptor”
• The recent surge in customer grievances the recent surge in
customer grievances
• The risks arising out of unauthorized debits to customer accounts
owing to contributory fraud, bank negligence, customer negligence
and third party breaches have been taken into account
• Policy covers aspects of customer protection, including the
mechanism of creating customer awareness on the risks and
responsibilities, and customer liability
 Electronic banking
transactions

Remote/
online Face-to-face/
Proximity
payment
BANK’S COMMITMENT TO ENSURING
CUSTOMER PROTECTION
(i) Robust and dynamic fraud detection and prevention mechanism
(ii) Mechanism to assess the risks
(iii) Appropriate measures to mitigate the risks
(iv) A system of continually and repeatedly advising customers
 REPORTING OF UNAUTHORIZED
TRANSACTIONS BY CUSTOMERS TO BANK
• Mandatorily registered for SMS alert
• E-mail alert
• Notify the Bank about any unauthorised electronic banking transaction at the
earliest
• Bank will provide customers with 24x7 access through multiple channels (via
website, SMS, e-mail, a dedicated toll-free helpline, reporting to home branch,
etc.)
• Direct link for lodging the complaints
• Bank will endeavor to complete the investigation within 10 working days of
notification
 LIABILITY OF A CUSTOMER
a) Zero Liability of a Customer
(i) Contributory fraud/ negligence/ deficiency on the part of the bank
(ii) Third party breach

b) Limited Liability of a Customer

(i) Loss is due to negligence by a customer
(ii) In cases where the responsibility for the unauthorised electronic banking
transaction lies neither with the bank nor with the customer, but lies
elsewhere in the system
 Table1
Maximum Liability of a Customer under paragraph b.(ii)
(iii) Further, if the delay in reporting by the customer is beyond seven working days,
the customer shall be liable for the entire value of the transaction(s) involved

Table 2
Summary of Customer’s liability
COMMUNICATION OF THE POLICY:
• At the time of account opening
• On bank website through publication
• Through messages and emails
REVERSAL TIMELINE FOR ZERO LIABILITY/
LIMITED LIABILITY OF CUSTOMER
• Bank shall provide the shadow credit within 10 working days.
• Further, bank will ensure that:
– Issue should be resolved and liability of the customer should be
determined within 90 days.
– Either issue resolved or not, in both the cases, the customer should be
compensated as per prescribed rules.
– In case of debit/bank account fraud, there should not be loss of interest.
• The customer must provide the documents required within the
specified timeframe, otherwise, they will be liable for their loss.
 REPORTING AND MONITORING
MECHANISM
• Cases should be quarterly reviewed in the Customer Service
Committee of the Board.
• Reporting involves:
– volume/ number of cases
– the aggregate value involved and
– distribution across various categories of cases e.g. CPT, CNPT, Internet
banking etc.
• The committee should overlook the functioning of the grievance
redress mechanism and take appropriate measures to improve the
systems and procedures.