InvestorQ : What is zero liability in unauthorised transactions?
shivani Walawalkar made post

What is zero liability in unauthorised transactions?

Answer
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1 year ago


The Reserve Bank of India has laid enough emphasis on limiting customers’ liability in unauthorised electronic banking transactions. These norms include ‘zero liability’ and ‘limited liability’ for customers.

According to the RBI, a customer need not bear any loss if the deficiency is on the part of the bank, and in cases where the fault lies neither with the bank nor with the customer but lies elsewhere in the system. For this, the customer needs to notify the bank within three working days of receiving the communication.

According to its framework, a customer’s entitlement to zero liability shall arise where the unauthorised transaction occurs in the following events:

i. Contributory fraud/ negligence/ deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).

ii. Third-party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorised transaction.