Skip to main content

RBI Caps Customer Liability in Fraudulent Deals

By
The Reserve Bank India has decided to cap the customers' liability arising out of fraudulent electronic transactions, and has warned banks that they should plug the loophole leading to misselling of insurance products, failing which they would be penalised.
“The RBI is examining whether to issue regulatory directions to reduce the liability of the customer on fraudulent transactions arising out of electronic banking transactions,“ said RBI deputy governor SS Mundra, speaking at an event organised by Banking Codes and Standard Board of India.
“Between the two -the institution and the customer -the balance of po wer is skewed. The idea is that the liability for the customer should not go beyond a point,“ he said.
At present, BCSBI --a quasi-re . 10,000 beyond which a customer is ` not liable for fraudulent ecommerce transactions, provided the customer has notified the bank about it.
Stating that misselling has been rampant on insurance products, he said, “Often higher sales targets, coupled with front-ended high commissions, are the main motives for such misselling. There is no real oversight on unethical selling of third party products.“
Since banks have a huge network of branches, insurance companies have tied up with them to sell their products. Banks earn commission for hard-selling insurance schemes which gives a boost to their bottomline. While directing banks to plug this loophole, Mundra said, “RBI would take strict action, including heavy penalty, if the banking industry continues to harness such unethical and unacceptable practises of misselling third party products. It would be appropriate for the banks to put in place a system of period inspection on sale of third party pro ducts by their own staff or DSAs.“
Talking of cyber frauds, he said that it is imperative for banks to have a robust mechanism to prevent incidents of frauds in mobile, net banking and electronic fund transfer to retain customers' confidence in these delivery channels. These channels are very meaningful in terms of facing competition, reducing cost and improving customer base.
“But if customers' don't get confidence in the channels, they may migrate to other banks or use traditional channels which would mean higher operating cost for the banking system,“ he said.
Mundra also said that a nodal officer at the bank, appointed for customer grievance, should analyse the root cause to ensure that similar complaints do not arise again.
The Economic Times New Delhi, 24th May 2016

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more