New Delhi: With an increase in digital payments and netbanking 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 unauthorised electronic banking transactions. A framework has been established on limiting 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 you or by your bank depends on whose fault or negligence it is in the case. In all cases you are supposed to immediately alert your bank about any unauthorised banking transaction.

If the loss happened due to the bank’s negligence:

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 you. Your liability is zero in this case.

If the fraud is a result of your negligence:

In cases where the loss is due to your negligence then you will have to bear the entire loss until the unauthorised transaction is reported to the bank.

If neither you nor your bank is at fault:

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 unauthorised transaction.

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

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

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