Public sector banks have reported a significant increase in compensation for frauds and e-frauds, with payouts rising over three-fold to Rs 140 crore during the fiscal year 2023-24, as informed to Parliament on Tuesday. This marks a substantial increase from the Rs 42.70 crore paid in the previous fiscal year. Finance Minister Nirmala Sitharaman shared these details in a written reply to the Rajya Sabha.
Top Compensation Payers
During FY24, Union Bank of India emerged as the highest compensator, paying Rs 74.96 crore. It was followed by Bank of India with Rs 20.38 crore and Indian Bank with Rs 16.16 crore. In FY23, Union Bank of India was again the leading payer with Rs 12.18 crore, followed by Central Bank of India at Rs 11.68 crore.
Regulatory Instructions on Customer Liability
Finance Minister Sitharaman noted that the Reserve Bank of India (RBI) issued instructions in July 2017 to limit customer liability in cases of unauthorized electronic banking transactions. According to these instructions, customers have zero liability if the unauthorized transaction results from contributory fraud or negligence on the part of the bank.
Customer Liability Based on Reporting Time
If the deficiency is neither with the bank nor the customer but exists elsewhere in the system, the customer will have zero liability if they notify the bank about the unauthorized transaction within three working days of receiving information about the transaction from the bank. If the customer reports the transaction within 4-7 working days, their liability ranges from Rs 5,000 to Rs 25,000. For reports made beyond 7 working days, the liability will be determined according to the bank’s board-approved policy.
Negligence and Liability
In cases where loss results from customer negligence, the customer is responsible for the entire loss until the unauthorized transaction is reported to the bank. Any losses occurring after the transaction is reported are covered by the bank.
