RBI Guidelines on Customer Protection in Electronic Transactions (6th July 2017)
In response to the increasing number of grievances related to unauthorized electronic transactions, the Reserve Bank of India (RBI) issued a circular on 6th July 2017 to enhance customer protection. The guidelines set a standardized framework for reporting, liability, and resolution timelines in cases of fraudulent electronic transactions.
Key Provisions of the RBI Circular:
1. Customer-Friendly Notification System
- Banks must enable customers to instantly respond to SMS and email alerts regarding transactions.
- Customers should not have to search for a webpage or an email address to report unauthorized transactions.
- A direct link for lodging complaints, with a specific option to report unauthorized transactions, must be available on the home page of the bank’s website.
2. Shadow Reversal (Provisional Credit) Within 10 Working Days
- Upon receiving a fraud report, the bank must credit the disputed amount (shadow reversal) to the customer’s account within 10 working days, without waiting for an insurance claim settlement.
3. Customer Liability in Unauthorized Transactions
The liability of the customer depends on when they report the fraudulent transaction:
| Time of Reporting by Customer |
Customer’s Liability |
Bank’s Responsibility |
| Within 3 working days |
Zero liability |
Full credit within 10 working days |
| Within 4-7 working days |
Limited liability (up to ₹25,000) |
Refund within 10 working days |
| After 7 working days |
As per bank’s policy |
Policy disclosed publicly |
- For debit card or bank account fraud, the customer does not suffer loss of interest.
- For credit card fraud, the customer does not bear additional interest burden.
4. Timeframe for Resolving Complaints
- Banks must resolve all fraud complaints within 90 working days from the date of receipt of the complaint.
5. Customer’s Liability in Case of Negligence
- If the fraudulent transaction occurs due to customer negligence (e.g., sharing OTPs or account details), the customer bears full liability until it is reported.
- Once reported, any further loss is borne by the bank.
6. Limited Liability Based on Account Type
The RBI has capped customer liability depending on the type of bank account:
| Account Type |
Maximum Liability |
| Basic savings account |
₹5,000 |
| Regular savings accounts, prepaid instruments, gift cards, credit cards (up to ₹5 lakh limit) |
₹10,000 |
| Credit cards with limits above ₹5 lakh |
₹25,000 |
Impact of the RBI Guidelines:
- Enhanced customer protection from fraudulent transactions.
- Faster redressal by ensuring banks process claims within 90 working days.
- Encouragement to report fraud early, as delayed reporting may lead to financial loss for the customer.
- Increased transparency, as banks must publicly disclose their fraud liability policies.
These guidelines ensure that customers are not unfairly burdened in cases of unauthorized transactions, while also promoting responsible banking practices.
