How Good Is The Decision Of RBI To Zero the Liability Of Customer In Online Frauds?

Well if banking system needed something from its parent bank at this point of time, it was just the moral support which the central bank seems to be withdrawing. By putting zero liability on the customers for frauds and the onus of proving the customer liability residing with the bank itself there is a lot of chaos in today’s market with the multi faceted interpretation of the ruling.


It is not unknown a fact, that a customer may lie about not having told the password or the pin or the card details over the phone to the fraudster when inquired upon by the bank. In that case it will be difficult to prove how the fraud happened. A customer also now gets a buffer time of 3 days to report third party breach where in the deficiency lies neither with the bank nor the customer but elsewhere in the system. Even if there is a delay in the customer’s reporting of the matter of 4 or more days, the limited liability clause suggests a maximum cap on the liability of the customer as below

1. Small Accounts/JanDhan Accounts : 5000/-
2. All other SB accounts / CC/ OD/ CA with avg. annual balance 25 lakh / Credit Card upto 5 lakh limit : 10000/-
3. CA with avg balance above 25 lakh/ Credt card above 5 lakh limit : 25000/-

Hence overall liability of the customer in third party breaches (where physical presence of Card/customer is not necessary such as mobile banking/online transaction/ CNP transactions) remains as

1. Zero – if the customer reports within 3 days
2. Limited to amount of transaction or as mentioned above in points 1 to 3 whichever is lower, if customer reports after 4 – 7 days.
3. As decided by bank’s board – if customer reports after 7 days time period.


This amounts to simply an additional burden on the banks PL for any amount over and above the specified limits. Further bank to ensure to refund the money to customer within 10 working days and where dispute is big, a maximum of 90 days period is allowed for redressal.

It is nice to think about the benefit of the customer and to motivate them to turn to digital banking platform but at the cost of already sinking banking industry is a little too much to ask.

We would like to hear in our comments section below what fellow Bankers feel for this RBI ruling?

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Dhruva Awasthi is a young and dynamic writer with fresh thoughts and a firm believer that writing is the best form of expression. He crossed the threshold from his mundane arduous work life into the world of writing because of his pure love for penning down the thoughts which entwines his mind. He is an Engineer by profession and a writer by choice. He has a flair for writing on a wide array of genres spreading his wings from politics, food, health, spiritual to poetry, drama and fiction. Dhruva is methodical and punctilious and hopes to bring realism to the table, through his writings and through Thatslyf.

1 Comment

    • Kamlesh Kumar Tiwari
      July 8, 2017

      It was need of time. It will encourage digital banking. Problem is with PSBs. Their pace of modernisation of is not at par with country’s need. Our system can be made full proof by introducing modern security measures.


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