The Reserve Bank of India (RBI), in a draft circular on digital banking, stated that banks should not mandate digital banking for users to access other services and proposed stronger fraud protection rules to protect customers.
According to the central bank’s directive, banks cannot make it mandatory for their customers to choose a ‘digital banking channel’ to avail services like debit cards.
“Banks shall not make it mandatory for the customer to opt for any digital banking channel to avail any other facility like debit cards,” said the banking regulator in the draft norms.
Digital banking channels are the services provided by a bank to its customers through its website, mobile phones, or other digital channels via any electronic equipment, granting people access to carry out transactions.
The RBI mentioned that banks will have to comply with the guidelines on customer protection, including limiting liability in fraud protection, in order to better regulate digital banking services.
“Banks shall comply with the guidelines on customer protection, including limiting of liability in unauthorised electronic banking transactions,” the RBI said.
Here are key takeaways from RBI’s new draft
1. Net worth: In the new draft, the RBI directed that a person with more than ₹50 crore net worth must ask for the bank’s prior approval to access the digital transactional banking facility due to the ‘minimum regulatory requirement’.
“Net worth as per minimum regulatory requirement or ₹50 crore, whichever is higher, as on 31 March of the immediately preceding financial year,” said the RBI in the draft.
2. Customer consent: The new directive also mandates that banks explicitly ask for customer consent before providing any digital banking service, the data for which will be recorded.
“Banks shall obtain explicit consent from the customer for providing digital banking services, which may be duly recorded/documented. It shall also be clearly indicated that SMS/email alerts will be sent to the mobile number/email of the customer registered with the bank for operations, both financial and non-financial, in their account(s),” said the RBI.
3. Clear terms & conditions: The central bank also directed that the banks will have to clearly outline the terms and conditions in a “clear and simple” language in English, Hindi, and the local language for customers to understand easily.
4. Limit Risk: The RBI also directed that banks impose ‘risk mitigation measures’ according to the transaction limit and transaction velocity, among other things, depending on the risk perception.
“Banks shall put in place appropriate risk mitigation measures in accordance with their policies like transaction limit (per transaction, daily, weekly, monthly), transaction velocity limit, fraud checks, etc. depending on their risk perception,” the central bank said.
5. Surveillance mechanism: The central bank also said that it wants the banks to impose transaction monitoring and surveillance mechanisms, which will study the customer transaction behaviour pattern and monitor unusual transactions in the system.
“Banks shall put in place risk-based transaction monitoring and surveillance mechanism. Study of customer transaction behaviour pattern and monitoring unusual transactions or obtaining prior confirmation from customers for outlier transactions may be incorporated in the systems in accordance with the Fraud Risk Management Policy of the bank,” said RBI in its draft.
