What changed
RBI inserted new definitions for Card Not Present, Card Present, Electronic Banking Transaction, Fraudulent EBT, and negligence (both customer and UCB) into the 2025 Responsible Business Conduct Directions. These apply to transactions on or after January 1, 2027. The amendment clarifies what constitutes customer vs. bank negligence, impacting liability determination.
What it means for you
UCBs must now clearly distinguish between card‑present and card‑not‑present transactions for liability purposes. The definition of customer negligence is expanded to include actions like downloading malicious apps or ignoring bank warnings. The definition of UCB negligence includes failure to implement mandated security systems, send alerts, provide 24×7 reporting channels, act diligently on customer notifications, and system malfunctions or security breaches.
What you must do
- Update internal policies and customer terms to reflect new definitions of fraud, negligence, and transaction types.
- Ensure 24x7 reporting channels for unauthorised transactions and loss of cards are operational and well-publicised.
- Review and strengthen systems for sending mandatory transaction alerts and handling customer notifications promptly.
- Train staff on the revised negligence criteria to avoid misattribution of liability.
- Prepare for compliance by January 1, 2027, including system changes for shadow reversal processes.
Who it affects
Urban Co-operative Banks (UCBs), UCB customers using electronic banking, UCB compliance and risk management teams, Digital payment system providers for UCBs
When do these new rules take effect?
The amendment applies to electronic banking transactions undertaken by UCB customers on or after January 1, 2027.
What is considered 'negligence by a customer' under the new rules?
Examples include failing to safeguard credentials, not reporting a fraudulent transaction or lost card promptly, ignoring clear bank warnings about scams, downloading malicious apps, or not updating registered contact details.
What happens if a UCB is found negligent?
The bank may be held liable for losses if it fails to implement mandated security systems, send alerts, provide 24x7 reporting channels, act diligently on customer reports, or if system breaches/internal fraud occur.