After a long wait, the Limited Liability Circular issued on August 11, 2016 (Also refer an earlier article), has now been operationalized.
In a notification released today, RBI has finally issued the circular as an operational circular. (Earlier circular was a draft circular for pubic comments).
We welcome the circular which is definitely going to help some of the customers. Bankers will also have a breather since in cases where they can prove that the customer has parted with the credentials for a phishing call, they may try to avoid the liability.
The essence of the circular is that Bankers should have a linked mobile of the customer and should not fail to issue an SMS alert for every debit to the account. In case of any unauthorized transaction, if the customer informs the Banker within 3 days, he shall have zero liability. If the information is given after 3 days but before 7 days, the liability shall be limited to Rs 5000 for BSBD SB acccounts.
In case of other SB Accounts, Pre-paid Payment Instruments and Gift Cards, Current/ Cash Credit/ Overdraft Accounts of MSMEs, Current Accounts/ Cash Credit/ Overdraft Accounts of Individuals with annual average balance (during 365 days preceding the incidence of fraud)/ limit up to Rs.25 lakh and Credit cards with limit up to Rs.5 lakh, the liability will be limited to Rs 10000/-
In other cases (All other Current/ Cash Credit/ Overdraft Accounts and Credit cards with limit above Rs.5 lakh) the liability will be limited to Rs 25000/- .
If the Bank is informed beyond 7 days, the Bank will still be liable but the extent of liability would be as per the Bank’s policy (Which needs to be defined).
These limits will be applicable where the customer has no “Contributory Negligence” where he has parted with information on his account to phishing calls.
We will discuss a more detailed implication of this circular and also some services which Naavi.org would provide to Bank customers to take advantage of the circular in subsequent posts.