Zero liability for Customer who faces Online Fraud


If you usually do online banking for banking activities and someone has stolen your hard earn money from your account. In that scenario you must immediately inform the bank about this online fraud in your bank account. This information must be given within 3 days. Once you have informed your bank within the assigned time limit then it became the responsibility of bank, which in return makes zero liability for customer who faced online fraud. Now it becomes the responsibly of the bank to cover the customer loss. This was done due to exponential increase in online fraud complaints. Moving in this direction Reserve bank of India issued a policy which makes zero liability toward customer in case of third party online fraud.

What is the policy?

  1. If the customer informs the bank about the online fraud within 3 days then it became the liability of bank to fulfill the customer loss.
  2. However, if the customer informs the bank about the online fraud between 4th day to 7th day then it became the liability of bank to fulfill the customer loss. But here is a twist in this case the maximum liability toward bank would be upto Rs 5,000.
  3. According to RBI if the bank employee is involved in the online fraud then there is no time limit to inform the bank and bank holds the entire liability of the online fraud.

Bank has to inform the Customer:

  1. In case bank came to know that there is online fraud happened in any customer account then it is the responsibility of bank to inform the customer within 3 days.
  2. This information regarding online can be conveyed to customer via Email, SMS. Same mediums are applicable to customers who wish to inform the bank about the online fraud.

Proposed norm would be applicable on all online transactions:

According to the RBI norm, it would be applicable on all online financial transaction. Online financial transaction include transaction done by credit card, payment by debit card, online payment done at shop, payment via mobile wallet

Banks has to solve the case within 90 days:
  • In the draft Reserve bank of India has direct all the banks from Public and Private sectors to solve the case with 90 days. Duration of 90 days starts from the date the customer has informed the bank about the online fraud.
  • Till the time the case is not solved bank cannot impose any penalty or late fees to the customer.
  • In order to inform the bank. RBI has directed the banks to receive the online fraud complaint from various modes which include information through SMS, Email, informing the bank by visiting the bank, informing through toll free number of bank, through official website.

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