What changed
RBI inserted new definitions for Card Not Present, Card Present, EBT, fraudulent EBT, negligence by bank/customer, shadow reversal, third-party breach, and unauthorised EBT into the Responsible Business Conduct Directions, 2025 via the Third Amendment Directions, 2026. The amendments clarify when customers are liable for unauthorised transactions, including scenarios like ignoring bank scam warnings or downloading malicious apps. Shadow reversal is defined as temporary provisional credit.
What it means for you
Banks must update their internal policies to align with these explicit negligence criteria, which include system failures and security breaches as bank negligence. Lenders face higher operational risk if they fail to provide 24x7 reporting channels or act diligently on customer fraud reports. The new definitions will likely increase customer claims for zero liability, requiring stronger fraud monitoring and alert systems.
What you must do
- Review and update your bank's liability framework for unauthorised EBTs to match the new definitions by Jan 1, 2027.
- Ensure 24x7 channels for reporting fraudulent EBTs or lost cards are operational and well-publicised.
- Train customer service teams to handle scam warnings and negligence assessments per the new rules.
- Audit your alert systems to guarantee mandatory EBT alerts are sent without fail.
Who it affects
Commercial banks (excluding SFBs, PBs, RRBs, LABs), Credit card issuers, Deposit account holders
What is the effective date for these new liability rules?
The amendments apply to electronic banking transactions undertaken on or after January 1, 2027.
Does customer negligence now include ignoring bank scam warnings?
Yes, the new definition of customer negligence includes not paying attention to specific, directed, and clear warnings from the bank that a prospective transaction is likely a scam.
What happens if a bank is found negligent?
If bank negligence is proven (e.g., system failure, no alerts, no 24x7 reporting), the customer may have zero liability for the unauthorised transaction.