• Important decision of RBI on fraudulent transactions


• Wrong selling at the bank counter will stop


• RBI eyes on debt recovery agents too

RBI On Bank Fraud: Reserve Bank Governor Sanjay Malhotra said the RBI will introduce new rules to compensate bank customers for fraudulent small-value transactions. The existing guidelines limiting customer liability for unauthorized electronic banking transactions were issued by the RBI Governor in 2017, specifying conditions and timescales for zero or limited customer liability.

Considering the rapid adoption of technology in the banking sector and payment system, these guidelines have been revised. The governor added that the revised draft guidelines, which include a compensation framework for small-value fraudulent transactions, would soon be released for public consultation.

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The RBI Governor also said that the RBI is tightening regulations to prevent mis-selling of financial products and services by banks and non-government financial institutions. Mis-selling of financial products and services by any bank or NBFC has serious consequences, be it for the customer or the financial institution. He further said that it is necessary to ensure that the third-party products sold over the bank counter are tailored to the needs of the customers and the risk capacity of individual customers. At present, different categories of regulated entities such as banks and non-government financial institutions have different instructions regarding appointment of debt recovery agents and ethical aspects to debt recovery.

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For this reason, it has been decided to issue comprehensive guidelines on promotion, marketing and sale of financial products and services to Regional Investors (RE). The RBI Governor said that the draft guidelines in this regard will be released soon for public consultation. He also said that the RBI has decided to review and harmonize all existing guidelines of conduct on appointment of recovery agents and other aspects to debt recovery. Draft guidelines in this regard will soon be released for public consultation.