Ombudsman, limited liability cover to make e-wallets safer

Mumbai: To inspire confidence among users of digital payments, the RBI has said that it will introduce the concept of limited liability for prepaid instruments, which includes digital wallets. Also, a new office of ombudsman for digital transaction is being created to take up complaints from individuals for prepaid instruments.

Last year, the central bank had introduced the concept of ‘zero liability’ for card users, provided they acted prudently in not divulging credentials and reported frauds in time. Under this policy, cardholders who lost money due to a third-party breach and who reported the loss within three days would get all their money back.

Even where there is some negligence on the part of the customer in not responding to alerts and not notifying the bank, the maximum liability was capped at Rs 5,000 for a basic savings account and Rs 10,000 for most other accounts. For credit cards with limits above Rs 5 lakh, the maximum liability has been fixed at Rs 25,000. However, where the customer has shared his password, he will be liable for all the losses until he reports it to the bank.

On Wednesday, the RBI said that the same limited liability concept will be extended to users of prepaid instruments. The liability limits will be announced by the RBI. According to banks, the liability limits for e-wallets is likely to be lower, considering the smaller transaction size and lower balances.

Those who use debit or credit cards can complain to the banking ombudsman if they have any dispute with the bank. Currently, around 20% of all complaints pertain to either debit or credit cards. The creation of an ombudsman for digital transactions, besides providing a platform for customers, will enable the RBI to keep track of discrepancies.

“RBI’s endeavours to promote a less-cash society has resulted in a significant rise in the volume, value and channels for conducting digital transactions. For promoting the level of trust, a dedicated and empowered grievance redressal system is a pre-requisite,” said RBI deputy governor M K Jain. The ombudsman would be funded by the RBI and will be a cost-free and expeditious platform for individuals. “It will cover all entities falling within RBI’s jurisdiction, which means non-banks as well,” said Jain.

The development was reported by

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