Electronic Frauds in Banks.. New guidelines to benefit Customers

The year 2014 has started with some good news for Bank fraud vicitms. According to today’s Economic Times, it is stated that the new code released by the Banking Codes and Standards Board of India (BCSBI) states that

“Customers will have to be compensated for electronic frauds unless the bank can prove the fraud occurred due to negligence on part of the client”

See the Article

This is to be considered as a positive development for the reason that this narrows down the defense of the bank in avoiding the liability through litigation.

Further this may reopen the opportunity for customers to approach the Banking Ombudsman since non compliance of the BCSBI code could be a cause of action for the Ombudsman to intervene. Earlier the Banking Ombudsman was reluctant to take up the complaints on the ground that it involved a Cyber Crime and required evaluation of complicated digital evidence.

According to BCSBI, “The revised code says that if the customer incurs any direct loss due to a security breach of the Internet banking system that is not contributed or caused by the customer, the bank will bear the loss, unless it is able to establish that the customer is guilty.” 

The revised code which will be effective from January 2014   also  says banks will be responsible for any acts of omission and commission committed by business correspondents.

Naavi has been personally fighting for such mandate for several years now and Banks such as ICICI Bank and Axis Bank have been frustrating his efforts through litigation. These guidelines therefore come as a big relief.

Naavi

Print Friendly, PDF & Email

About Vijayashankar Na

Naavi is a veteran Cyber Law specialist in India and is presently working from Bangalore as an Information Assurance Consultant. Pioneered concepts such as ITA 2008 compliance, Naavi is also the founder of Cyber Law College, a virtual Cyber Law Education institution. He now has been focusing on the projects such as Secure Digital India and Cyber Insurance
This entry was posted in Bank, ITA 2008. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.