The Reserve Bank of India on Friday directed banks to reimburse customers for amounts wrongfully debited from their accounts in failed ATM transactions within seven days of an account holder’s complaint or else pay a Rs 100 per day compensation.  “The time limit for resolution of customer complaints by the issuing banks shall stand reduced from 12 working days to seven working days from the date of receipt of customer complaint,” the RBI said in a notification.

Failure to re-credit the amount within seven working days will require the issuing bank to pay a compensation of Rs 100 per day, it said.

Earlier, banks were required to reimburse customers for amounts wrongfully debited from their accounts in failed ATM transactions within 12 days.

The RBI further said that all customers are entitled to receive such compensation for delays only if a claim is lodged with the issuing bank within 30 days of the date of transaction. The directive shall be come into effect from July 1, 2011.

The central bank instructed the issuing bank and the acquiring bank to settle failed ATM transaction disputes through the ATM system provider only. No bilateral settlement arrangement outside the dispute resolution mechanism available with the system provided is possible,” RBI said. This measure is intended to reduce instances of disputes in payment of compensation between the issuing and acquiring banks, it added.

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RBI/2010/11/547
DPSS.PD.No.2632 / 02.10.002 / 2010-2011

May 27, 2011

The Chairman and Managing Director / Chief Executive Officers
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks

Madam / Dear Sir

Reconciliation of failed transactions at ATMs

Please refer to our letter DPSS No. 711 / 02.10.02 / 2008-2009, 1424 / 02.10.02 / 2008-2009 and 101 / 02.10.02 / 2009-2010 dated October 23, 2008, February 11, 2009 and July 17, 2009 respectively on the captioned subject.

2. Reserve Bank has been continuously monitoring the implementation of various directions by the banks. Based on a review of the developments and with a view to further improve the efficiency of operations, it has been decided as under :-

  1. The time limit for resolution of customer complaints by the issuing banks shall stand reduced from 12 working days to 7 working days from the date of receipt of customer complaint. Accordingly, failure to recredit the customer’s account within 7 working days of receipt of the complaint shall entail payment of compensation to the customer @ Rs. 100/- per day by the issuing bank.
  2. Any customer is entitled to receive such compensation for delay, only if a claim is lodged with the issuing bank within 30 days of the date of the transaction.
  3. The number of free transactions permitted per month at other bank ATMs to Savings Bank account holders shall be inclusive of all types of transactions, financial or non-financial.
  4. All disputes regarding ATM failed transactions shall be settled by the issuing bank and the acquiring bank through the ATM system provider only. No bilateral settlement arrangement outside the dispute resolution mechanism available with the system provider is permissible. This measure is intended to bring down the instances of disputes in payment of compensation between the issuing and acquiring banks.

3. The directive is issued under section 18 of Payment and Settlement Systems Act 2007, (Act 51 of 2007).Non-adherence to the provisions of this circular shall attract penalty as prescribed under the Payment and Settlement Systems Act 2007 (Act 51 of 2007).

4. This directive shall come into effect from July 01, 2011

5. Banks may widely publicise  these changes at all ATM locations and by individual intimation to customers.

6. Please acknowledge receipt.

Yours faithfully

G Padmanabhan
Chief General Manager

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