RBI/2017-18/109
DCBR.BPD.(PCB/RCB).Cir.No.06/12.05.001/2017-18

Dated: December 14, 2017

The Chief Executive Officer
All Primary (Urban) Co-operative Banks/
All State Co-operative Banks/
All District Central Co-operative Banks

Madam / Dear Sir,

Customer Protection – Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions

Please refer to our circular UBD.BSD.I/PCB/No.45/12.05.00/2001-02 dated May 30, 2002 and para 13 of circular RPCD.CO.RCB.BC.No.36/07.51.010/2014-15 dated October 22, 2014 regarding reversal of erroneous debits arising from fraudulent or other transactions.

2. With the increased thrust on IT enabled financial inclusion and related customer protection issues, and considering the recent surge in customer grievances relating to unauthorised transactions resulting in debits to their accounts/cards, the criteria for determining the customer liability in these circumstances have been reviewed. The revised directions in this regard are set out below.

Strengthening of systems and procedures

3. Broadly, the electronic banking transactions can be divided into two categories:

  1. Remote/ online payment transactions (transactions that do not require physical payment instruments to be presented at the point of transactions e.g. internet banking, mobile banking, card not present (CNP) transactions), Pre-paid Payment Instruments (PPI), and
  2. Face-to-face/ proximity payment transactions (transact

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