Thursday, 3 October 2013

Banks to Pay Penalty for Fraudulent Card Swipe Transactions at Unsecure POS Terminals

Reserve Bank of India has on September 27, 2013 issued a circular fixing responsibilty of banks as part of Security and Risk Mitigation Measures for Fraudulent Card Present Transactions, i.e. card swipe transactions at merchant establishments. In order to make such transactions secure, Reserve Bank of India had earlier mandated the task of securing the technology infrastructure (Unique Key Per Terminal- UKPT or Derived Unique Key Per Transaction- DUKPT/ Terminal Line Encryption- TLE) as stated under Para 4(a)(3) of RBI circular DPSS.PD.CO.No.513 / 02.14.003 /2011-2012 dated September 22, 2011. As per the new circular, the card holder/s would be approaching his/her card issuing bank for any fraudulent POS transaction/s in India (which have occurred after September 30, 2013), and the issuing bank would ascertain, within 3 working days from the date of cardholder approaching the bank, whether the respective POS terminal/s where the said transaction/s occurred is/are compliant with TLE and UKPT/DUKPT as mandated. In the event it is found that the POS terminals are non-compliant as mandated, the issuing bank shall pay the disputed amount to the customer within 7 working days, failing which a compensation of Rs.100 per day will be payable to the customer from the 8th working day. Read more below...

Saturday, 15 June 2013

Guidelines for Physical Security of ATMs in India

I am not alone in wondering whether there are any guidelines for physical security of ATMs in India. The pathetic state of ATM security at present appears to suggest that either there are no guidelines, or any guidelines that are there are being violated by most of the banks without any fear of regulatory / supervisory action by Reserve Bank of India. I have tried to find out official information from Reserve Bank of India in this regard through RTI applications but did not get any such guidelines (Click here for details). Finally a helpful anonymous banker somewhere in India has mailed me a copy of a letter dated 4th April, 2012 written by National Payments Corporation of India (NPCI) to all its member banks asking them to implement measures for physical security of ATMs in India. In this letter, NPCI mentioned that a few ATMs of a member bank got compromised during January 2012. It was gathered that none of these ATMs had adequate physical security arrangements. Thus, to identify the control gaps in ATM security, NPCI had formed a "Task Force on ATM Security" with Industry Experts to prepare the report on best practices on ATM security. Read on...

Friday, 14 June 2013

What if a Bank Lost Title Deeds of a Home Loan Borrower

Its a scary question. But trust me, this happens very frequently in India. Home Loan borrowers have to deposit original title deeds of a property with their banks. Many times, after the loan is repaid in full, the banks do not return the original title deeds to the borrowers. Title deeds are reported to be misplaced or lost. Things get worse after this. Indian Banks Association has a model compensation policy that was adopted by almost all the banks in India. I saw the compensation policy of State Bank of India that specifies the compensation payable to a borrower in case State Bank of India is unable to return original property title deeds after repayment of home loan. This is what the policy says: "...In the event of loss of title deeds to mortgaged property at the hands of the Banks, the compensation will cover out of pocket expenses for obtaining duplicate documents plus a lump sum amount as decided by the Bank in the following manner: The Bank would pay the compensation for delay in return of securities/documents/title deeds to the mortgaged property beyond 15 days of repayment of all dues agreed to or contracted, subject to above conditions, @ Rs.100/- per day subject to maximum Rs.5000/- to the borrower." Keep Reading...

Saturday, 8 June 2013

CIBIL Status after Settlement - Settled or Clear

Is it possible to have a low CIBIL score even after paying all your credit card or loan dues to a bank? Its not only possible, the sad fact is that such complaints are very common. Very often banks offer settlement of overdues to their customers. The settlement means the customer gets to pay only a part of the overdues and the bank closes the credit card or loan account. Thereafter, the bank's ugly collection agents don't bother the customer. There are no recovery notices, no repossession threats. The customer is left in peace. Only, the peace is transient. The customer isn't told what he must have known. In the process of settlement the bank has to take what is called in financial parlance "a haircut". The bank does not get to recover all of its principal and all of its interest (profit) from the customer. Thus, to get even with the evil customer, the bank reports the customer's sin to the god of credit called "CIBIL" - Credit Information Bureau (India) Limited. Keep Reading...

Thursday, 30 May 2013

Acquiring Banks to Provide Details of Three Transactions before and after Failed ATM Transaction

National Payments Corporation of India (NPCI) has notified the responsibility of Acquiring Banks (bank whose ATM is used for Failed ATM Transaction) while responding to the complaint of a Failed ATM Transaction to the Card Issuing Bank. In its circular NPCI / 2012-13 / NFS / 2737 issued on 26th March 2013, NPCI directed that: "A customer dispute for ATM cash withdrawal arises generally in case of cash not dispensed or partial cash dispensed from the ATMs. In such scenario, the customer fills up a Complaint Form and submits it to his / her bank which has issued the ATM/debit card to the customer. The Issuing Bank raises a charge-back on the Acquiring Bank (whose ATM is used) on the basis of the customer's complaint. The Acquiring Bank checks ATM logs like Electronic Journal and if the transaction is successful and cash has been dispensed, the Acquiring Bank "represents" the transaction with supporting documents, like, ATM Electronic Journal (EJ) or Journal Print (JP)." Read more...

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All information given in this blog is obtained from sources in the public domain, RTI applications, discussions with bankers, bank customers in India and also with some employees of Reserve Bank of India having knowledge of the working of various Offices of Banking Ombudsman in India. All information in this blog is presented on a best effort basis and is not claimed to be complete information on any of the subjects covered in this blog. Use of any information given in this blog is purely voluntary on the part of the readers. Author of this blog does not assume any responsibility for any action of the readers related to any matter discussed in this blog or any consequences thereof. Readers of this blog are advised to consult a legal practitioner before taking any action related to any matter discussed in this blog.