Bank Account Hacked – Who Bears The Liability?

Is Online Banking Safe? 

The digital payment evolved overnight after the Demonetisation in 2016. India has developed the most “Immediate Payment Services” (IMPS) according to the reports of FSI. Around 73 percent of consumers showed interest in using digital modes of payment. This continuing broad scale of the transaction has also resulted in increase of online frauds either due to unawareness or human error. However, “The RBI, banks and financial intermediaries can only make the system robust at their end and educate the public. No one can save us if we reveal our own data”. Banks continually improve their systems to effectively deal with hacking attacks. Even if hackers are able to steal money from your account, you will likely be protected, if you safeguarded your personal information and reported the loss immediately, the bank is likely to reimburse your account.

Who Bears The Liability If My Bank Account Is Hacked? 

The Reserve Bank of India (RBI), in its annual report 2017-2018, has made it clear as to who will bear the “financial liability” in case of all unauthorized electronic banking transactions. However, In all cases, one is supposed to immediately alert his/her bank about any unauthorized transaction.

If The Loss Happened Due To The Bank’s Negligence

The “RBI” says if a deficiency that led to the fraudulent transaction has been found to be on part of the bank then as a bank customer you do not need to worry as the entire loss will be “borne by the bank”. Your liability is zero in this case.

If The Fraud Is A Result Of Your Negligence

In cases where the loss is due to your negligence then you will have to bear the entire loss.

If Neither You Nor Your Bank Is At Fault

In some cases, it may so happen that the fault lies within the system and neither the bank nor the customer is at fault. The customer’s liability will be zero if he or she reports it to the bank within 3 working days of receiving the communication from the bank about the unauthorized transaction.

If you report it with a delay of 4-7 working days then the maximum liability of the customer ranges from 5,000 to 25,000, depending on the type of account.

If You Report It After 7 Working Days, Your Liability Will Depend On The Bank’s Policy

The bank is required to credit (shadow reversal) the amount involved in the unauthorized electronic transaction to the customer’s account within 10 working days from the date of notification by the customer.

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