Know Banks Liability On Your Cash in Bank

In its Annual Report 2017-18 released today, the RBI has explained the framework for limiting the liability of customers in unauthorized electronic banking transactions.

A customer need not bear any loss if the deficiency is on the part of the bank and in cases where the fault lies neither with the bank nor with the customer but lies elsewhere in the system and the customer notifies the bank within three working days of receiving the communication from the bank about the unauthorized transaction. 

Where the loss is due to the customer’s negligence, the customer has to bear the entire loss until the unauthorized transaction is reported to the bank. In cases where the fault lies neither with the customer nor with the bank but lies elsewhere in the system and the customer reports the unauthorized transaction with a delay of four to seven working days after receiving the communication about the transaction, the maximum liability of the customer ranges from Rs 5,000 to Rs 25,000, depending on the type of instrument and type of account

If the unauthorized transaction is reported beyond seven working days, the customer liability shall be determined as per the bank’s Board-approved 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. The bank has to resolve the complaint and establish the liability of the customer, if any, within 90 days of the receipt of the complaint.

The Report from RBI.

Sudesh DJV

Sudesh DJV writes on the contemporary subject which is in the interest of our nation in particular and of mankind in general.