Reserve Bank Governor Sanjay Malhotra announced a new framework to compensate customers up to Rs 25,000 for losses incurred from small-value fraudulent transactions.
“It is also proposed to introduce a framework to compensate customers up to an amount of Rs 25000 for loss incurred in small-value fraudulent transactions,” he said.
Announcing the last bi-monthly policy for the current financial year, Malhotra said, “we will also publish a discussion paper on possible measures to enhance the safety of digital payments. Such measures may include lagged credits and additional authentication for specific class of users like senior citizens.”
“We will compensate fraud-hit customers up to Rs 25,000, or 85 per cent of total amount, as long as transaction is not malafide”, RBI Governor said. The governor elaborated that the compensation will be given to the victims even whwn OPT is shared.
Protection against mis-selling
Governor Malhotra stated that for customer protection, the RBI will issue three draft guidelines: one relating to mis-selling; two regarding the recovery of loans and the engagement of recovery agents; and three on limiting the liability of customers in unauthorised electronic banking transactions.
Observing that mis-selling financial products and services by any regulated entities has significant consequences for both customers as well as such entities, Malhotra said, there is a felt need to ensure that third-party products and services that are being sold at the bank counters are suitable for customer needs and are commensurate with the risk appetite of individual clients.
The extant instructions on limiting the liability of customers in unauthorised electronic banking transactions were issued in 2017 and address scenarios and timelines for zero/limited liability of customers. He added that in view of the rapid adoption of technology in the banking sector and payments systems, the existing instructions have been reviewed since their issuance.
“It has therefore been decided to issue comprehensive instructions to REs on advertising, marketing and sales of financial products and services. Draft instructions in this regard would be issued shortly for public consultation,” he said.
Instructions on recovery agents
He further said that different sets of instructions are applicable to different categories of REs with respect to the engagement of recovery agents and the conduct-related aspects of loan recovery presently.
It has now been decided to review and harmonise all the extant conduct-related instructions on engagement of recovery agents and other aspects related to recovery of loans, he said.
Accordingly, the RBI Governor said, the draft instructions in this regard would be issued shortly for public consultation.