Is bank responsible for your money in case of cyber attack?

DAINIK NATION BUREAU

Who is liable if you lose money through an unauthorised electronic banking transaction such as a cyber attack on the bank or hacking of your online account? The Reserve Bank of India (RBI) had notified norms last year to fix the extent of liability in such cases, establishing a safety net for the citizens amid the national drive toward digital transactions and rising incidents of fraud.

In its Annual Report 2017-18 released today, the RBI has explained the framework on limiting liability of customers in unauthorised electronic banking transaction.

Zero liability
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 and the customer notifies the bank within three working days of receiving the communication from the bank about the unauthorised transaction.

Limited liability
Where the loss is due to customer’s negligence, the customer has to bear the entire loss until the unauthorised transaction is reported to the bank. In cases where the fault lies neither with the customer nor with the bank but lies elsewhere in the system and the customer reports the unauthorised transaction with a delay of four to seven working days after receiving the communication about the transaction, the maximum liability of the customer ranges from Rs 5,000 to Rs 25,000, depending on the type of account/instrument.