RBI Governor Sanjay Malhotra announced on Friday that the RBI is drawing up fresh rules on compensation for customers of banks in case of small value fraudulent transactions.
The extant instructions on limiting the liability of customers in unauthorised electronic banking transactions were issued in 2017, which deal with scenarios and timelines for zero or limited liability of a customer. In view of the rapid adoption of technology in the banking sector and payments systems, since issuance of these instructions, the existing instructions have been reviewed. Accordingly, the draft revised instructions, including a framework for compensation in case of small value fraudulent transactions, shall be issued shortly for public consultation, the RBI Governor said.
He also said that the RBI is tightening rules to check banks and NBFCs from mis-selling financial products and services.
Mis-selling financial products and services by any bank or NBFC has significant consequences for both customers as well as the financial entity itself. There is a felt need to ensure that third party products and services that are being sold at the bank counters are suitable to customer needs and are commensurate with the risk appetite of individual clients. It has therefore been decided to issue comprehensive instructions to REs on advertising, marketing and sales of financial products and services. The draft instructions in this regard shall be issued shortly for public consultation, the RBI Governor said.
He also said that the RBI has decided to review and harmonise all the extant conduct related instructions on engagement of recovery agents and other aspects related to recovery of loans. Accordingly, the draft instructions in this regard shall be issued shortly for public consultation.
Currently, different sets of instructions are applicable to different categories of Regulated Entities (REs) such as banks and NBFCs with respect to the engagement of recovery agents and conduct related aspects of loan recovery.
