RBI’s protective cover will encourage people to move towards e-transfers
Making electronic transactions safe and secure would be an imperative to taking banking digital. Reserve Bank of India's (RBI) latest norms to protect customers’ interest and limit their liability in online banking transactions are definitely a starting point. Mostly banks’ customers shy away from using different online payment gateways due to apprehensions about frauds robbing them of precious little financial resources which could disappear without a trace. After demonetising the high value currencies and limits slapped on cash transactions, several individuals and companies have been gradually taking recourse to online cash transactions. If latest data is any indication, banks have witnessed 831 million transactions worth Rs 101,000 crore last month alone processed by the National Payments Corporation of India (NPCI) network. Finance minister Arun Jaitley had in February this year promised to take online transactions to a huge 2500 crore in 2017-18.
Banks are in the process of adding ten lakh points of sale machines and rolling out 20 lakh Aadhar-based machines by September 2017. A multitude of options have been put in place to take Indian individuals and firms to the information highway for making transactions. For instance, United Payments Interface (UPI), Aadhar Pay, Unstructured Supplementary Service Data (USSD), debit & credit cards, Immediate Payment Service (IMPS) have turned favourites apart from BHIM that has increasing become popular. Given the vulnerability of the illiterate or semi-literate people, RBI’s protective cover will serve as an incentive for people and firms to switch over seamlessly to electronic funds transfers. If the banks allow customers to respond or reply to SMS or e-mail alerts, possibility of unauthorised transactions could be minimised. The option for customers to report frauds on homepage of banks websites would be an additional communication tool.
The decision to make customers liability virtually zero in cases where banks personnel are involved was established, would encourage people to move the digital way in making payments. Even in cases where customers have lost money due to third party breaches, their liability would be nil. In cases where the fraudulent transactions have taken place after the password was shared unknowingly or delayed reporting of a fraud, the liability of customer has been limited. RBI’s intention to protect customers in the tricky world of finance is most welcome. But, how does one resolve a dispute between banks and their customers with contrary claims relating to online payments? Can the RBI think of a quick dispute settlement mechanism to settle cases relating to online frauds? Like several countries, should India also have a rolling customer services fund that can be dipped into by banks to settle claims? These questions need to be answered to make digitisation and online payments safe and secure.