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Effective date: 12th August 2024
Introduction and Objectives
This policy specifies the compensation for directly measurable financial losses which customers might have incurred due to deficiency in services on part of the Bank. The Bank will be transparent, fair and efficient in providing compensation to its customers.
The commitments under this policy are without prejudice to any right the Bank will have in defending its position before any forum duly constituted to adjudicate banker-customer disputes.
Customer limited liability and protection policy
Keeping in mind the increasing thrust on financial inclusion & customer protection, the Reserve Bank of India had issued a circular on Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions. (RBI/2017-18/15 DBR.No.Leg.BC.78/09.07.005/2017- 18 dated July 6, 2017) which inter-alia requires Banks to formulate a Board approved policy in regard to customer protection and compensation in case of unauthorized electronic banking transactions The electronic banking transactions can be divided into two categories:
- Remote/ online payment transactions (transactions that do not require physical payment instruments to be presented at the point of transactions e.g. internet banking, mobile banking, card not present (CNP) transactions), Prepaid Payment Instruments (PPI), and
- Face-to-face/ proximity payment transactions (transactions which require the physical payment instrument such as a card or mobile phone to be present at the point of transaction e.g. ATM, POS, etc.)
This policy covers transactions only through the above modes. The policy excludes electronic banking transactions effected on account of error by a customer (e.g. NEFT/IMPS/RTGS carried out to an incorrect payee or for an incorrect amount), transactions done under duress, claims due to opportunity loss, reputation loss, other incidental costs or collateral damage. This policy is applicable to entities that hold relationships with the bank. This policy is not applicable to
- Non-Customer that use Bank’s infrastructure e.g. ATMs, electronic wallet
- Entities that are part of the ecosystem such as Interchange organisations, Franchises, Intermediaries, Agencies, Service partners, Vendors, Merchants etc.
Customer shall be compensated in line with this policy in case of loss occurring due to unauthorized transaction as follows
Zero Liability of customer
- Customer shall be entitled to full compensation of real loss in the event of contributory fraud/ negligence/ deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer)
- Customer has Zero Liability in all cases of third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorised transaction.
Limited Liability of customer
Liability in case of financial losses due to unauthorized electronic transactions where:
- responsibility for such transaction lies neither with the bank nor with the customer, but lies elsewhere in the system AND
- there is a delay on the part of customer in notifying/reporting to the Bank beyond 3 working days and less than or equal to 7 working days (after receiving the intimation from the Bank)
The liability of the customer shall be limited to real loss or amounts mentioned in the below, whichever is lower:
| Type of Account | Maximum liability (₹) |
|---|---|
| BSBD Accounts | 5000 |
| 10000 |
Complete Liability of customer
- Customer shall bear the entire loss in cases where the loss is due to negligence by the customer, e.g. where the customer has shared payment credentials or Account/Transaction details, viz. Internet Banking user Id & PIN, Debit/Credit Card PIN/OTP or due to improper protection on customer devices like mobile / laptop/ desktop leading to malware / Trojan or Phishing / Vishing attack. This could also be due to SIM deactivation by the fraudster. Under such situations, the customer will bear the entire loss until the customer reports unauthorised transaction to the bank. Any loss occurring after reporting of unauthorised transaction shall be borne by the bank.
- In cases where the responsibility for unauthorized electronic banking transaction lies neither with the Bank nor with the customer, but lies elsewhere in the system and when there is a delay on the part of the customer in reporting to the Bank beyond 7 working days, the customer would be completely liable for all such transactions
Reversal Timelines
- The Bank shall afford shadow credit to the customer account within 10 working days from the date of reporting in all cases as per above statements.
- Within 90 days of the date of reporting, the Bank shall either establish customer negligence or provide final credit to the customer. The customer will be given value dated credit (based on the date of unauthorized transaction) when the customer becomes eligible to be compensated. In case of debit card/ bank account, the customer shall not suffer loss of interest
Other Points:
- Customer would not be entitled to compensation of loss if any, in case customer does not agree to get the card hotlisted or does not cooperate with the Bank by providing necessary documents including but not limited to police complaint
- Compensation would be limited to real loss after deduction of reversals or recoveries received by the customer. The Committee on Customer Service shall periodically review the unauthorised electronic banking transactions reported by customers or otherwise, as also the action taken thereon, the functioning of the grievance redressal mechanism and take appropriate measures to improve the systems and procedures. All such transactions shall be reviewed by the bank’s internal auditors.
Delay in credit / return of NEFT / RTGS transactions on part of the bank’s systems and/or processes:
| Required Action | Compensation | Turnaround Time (TAT) |
|---|---|---|
| " Bank Customer account to be credited immediately, if transaction is still pending" | Compensation for interest loss at the RBI LAF Repo Rate plus two percent for the period of delay / till the date of refund as the case may be to the affected customers’ account without waiting for a specific claim to be lodged by the customer in this regard. Compensation to the extent of the financial loss to the customer by way of reduction in the minimum balance applicable for payment of interest on savings bank deposit or return of an issued cheque due to insufficient balance | Verification: Third party involvement (including other banks) - Within 1 month No third-party involvement - Within 7 working days Credit to the account: Immediately post verification Compensation: |
*Customer liability will be as per RBI guidelines
Automated Teller Machines (ATMs), including Micro-ATMs
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Customer’s account debited but cash not dispensed | Pro-active reversal (R) of failed transaction within a maximum of T + 5 days. | ₹ 100/- per day of delay beyond T + 5 days, to the credit of the account holder. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
Card Transaction
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Card to card transfer Card account debited but the beneficiary card account not credited. | Transaction to be reversed (R) latest within T + 1 day, if credit is not effected to the beneficiary account. | ₹ 100/- per day of delay beyond T + 1 day. |
| 2 | Point of Sale (PoS) (Card Present) including Cash at PoS Account debited but confirmation not received at merchant location i.e., charge-slip not generated. | Auto-reversal within T + 5 days. | ₹ 100/- per day of delay beyond T + 5 days. |
| 3 | Card Not Present (CNP) (e- commerce) Account debited but confirmation not received at merchant’s system. | ||
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
Debit Cards-disputed transactions
The Debit Card holder shall be responsible for all transactions approved on his/her debit card prior to report of the loss to the Bank as per bank’s Debit card terms and conditions, as amended from time to time and prevalent at the time of such event. Transactions reported as erroneous by customers in respect of debit card operations which require specific reference to a merchant establishment will be handled as per Chargeback rules laid down by Cardholder instrument.
Immediate Payment System (IMPS)
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Account debited but the beneficiary account is not credited. | If unable to credit to beneficiary account, auto reversal (R) by the Beneficiary bank latest on T + 1 day. | ₹100/- per day if delay is beyond T + 1 day |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
Unified Payments Interface (UPI)
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Account debited but the beneficiary account is not credited (transfer of funds). | If unable to credit the beneficiary account, auto reversal (R) by the Beneficiary bank latest on T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| 2 | Account debited but transaction confirmation not received at merchant location (payment to merchant). | Auto-reversal within T + 5 days. | ₹100/- per day if delay is beyond T + 5 days. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
National Automated Clearing House (NACH)
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Delay in crediting beneficiary’s account or reversal of amount. | Beneficiary bank to reverse the uncredited transaction within T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| 2 | Account debited despite revocation of debit mandate with the bank by the customer. | Customer’s bank will be responsible for such debit. Resolution to be completed within T + 1 day. | |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
Wallet
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Off-Us transaction The transaction will ride on UPI, card network, IMPS, etc., as the case may be. The TAT and compensation rule of respective system shall apply. | ||
| 2 | On-Us transaction Beneficiary’s PPI not credited. PPI debited but transaction confirmation not received at merchant location. | Reversal effected in Remitter’s account within T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
Aadhaar Enabled Payment System (AePS)
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Account debited but transaction confirmation not received at merchant location. | Acquirer to initiate “Credit Adjustment” within T + 5 days | ₹100/- per day if delay is beyond T + 5 day. |
| 2 | Account debited but beneficiary account not credited. | Acquirer to initiate “Credit Adjustment” within T + 5 days | |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
Levy of excess service charges
The bank would debit the customer’s account with any applicable service charge as per the schedule of charges notified by the bank. In the event the bank levies any charge in violation of the arrangement, the bank will reverse the charges with value when pointed out by the customer subject to scrutiny of agreed terms and conditions and such other terms and conditions as may be communicated from time to time.
Mis-selling of third party products
In the event of Bank receiving of any complaint from the customer regarding mis-selling of the third party products by the Bank, or about having engaged in any improper conduct or about having acted in violation of any Code adopted by the Bank, the Bank will take appropriate steps to investigate and to handle the complaint within one month of the receipt of the complaint.
In cases in which lapses by the Bank employees are established, the Bank will compensate the customer suitably, based on the facts and circumstance
Service Gesture Credits:
The Bank reserves the right, at its discretion, to waive off charges or credit amounts to a customer's account as a gesture of goodwill. Such decisions will be made on a case-by-case basis and might require consensus among the relevant departments depending on the specific situation. These service gestures aim to enhance customer satisfaction and address exceptional cases where standard procedures may not apply.
Delegated Authority
The delegated authority for settlement of claims arising out of unauthorised / erroneous direct debits / fraudulent transactions made in customer’s account is vested only with senior / top executives functioning in Head Office.
Force Majeure:
The bank will not be liable to compensate customers for delayed credit if some unforeseen event (including but not limited to civil commotion, sabotage, lockout, strike or other labor disturbances, accident, fires, natural disasters or other “Acts of God”, war, damage to the bank’s facilities or of its correspondent bank(s), absence of the usual means of communication or all types of transportation, etc.) beyond the control of the bank prevents it from performing its obligations within the specified service delivery parameters.
Violation of the Code by Bank’s Employees and Agents
In the event of receipt of any complaint from the customer that the Bank’s employee / representative / agency has engaged in any improper conduct or acted in violation of the Code of Bank’s commitment to Customers, the Bank shall compensate to the customer, on merit of the individual cases, the financial losses for the act of such employee / representative / agency after proper investigation.
Policy revision
- The Customer Service department shall be responsible to own, maintain and update this policy.
- Any revisions to the policy may seek inputs from Operations, Risk, Finance, Compliance and other concerned departments of the Bank.
- This policy shall undergo an annual review and approval process by the Board. If any change in this policy is subsequently approved, consequent upon any change in regulatory guidelines, market conditions, etc., such changes and approvals shall be deemed to be part of the policy until the policy and framework are comprehensively reviewed. All such interim changes shall be approved by the Board.
Regulatory References
- RBI Master Circular on Customer Service in Banks dated July 1, 2015
- Draft Circular on Customer Protection dated August 11, 2016
- IBA Model Compensation policy
- IBA Fair Practice Code
- IBA Model Customer Rights Policy
- BCSBI Code of Commitment to Customers
- RBI circular on 'Operation guidelines for Payments Bank' dated October 6, 2016
- RBI circular on customer Protection – Limiting Liability of Customers in Unauthorized Electronic Banking Transactions dated July 6, 2017
- RBI circular on Harmonization of Turn Around Time (TAT) and customer compensation for failed transactions using authorized Payment Systems dated September 20, 2019
Disclaimer
In the event of any conflict between the "Customer Compensation Policy" of the PPBL in the English language listed at https://www.paytmbank.com/Policies/Customer-Compensation-Policy-for-Paytm-Payments-Bank and the translated version of the "Customer Compensation Policy" in concerned local language updated on PPBL website, the English version shall prevail.
