PSU Bank Fraud Compensation Up 3x to Rs 140 Cr in FY24

New Delhi, Aug 6 (PTI) Public sector banks have reported over three-fold jump in compensation towards frauds or e-frauds reported by their customers to Rs 140 crore during 2023-24, Parliament was informed on Tuesday.

The amount of compensation paid by these banks stood at Rs 42.70 crore in the previous fiscal, Finance Minister Nirmala Sitharaman said in a written reply to the Rajya Sabha.

Union Bank of India paid the highest compensation of Rs 74.96 crore followed by Bank of India at Rs 20.38 crore and Indian Bank at Rs 16.16 crore during FY24, she said.

In FY23, Union Bank of India was again the highest compensation payer at Rs 12.18 crore followed by Central Bank of India at Rs 11.68 crore.

Sitharaman further said that RBI, in July 2017, issued instructions on limiting the liability of customers in cases of unauthorised electronic banking transactions.

As per these instructions, a customer has zero liability if the unauthorised transaction occurs on account of contributory fraud or negligence/deficiency on part of the bank, she said.

In cases where the deficiency lies neither with the bank nor with the customer but elsewhere in the system, the liability of a customer is zero, if she or he informs the bank regarding an unauthorised electronic transaction within three working days of receiving information in respect of the transaction from the bank, she said.

Liability of the customer ranges from Rs 5,000 to Rs 25,000 if reported within 4-7 working days, and if reported beyond 7 working days, it shall be determined as per the bank's board-approved policy, she said.

In cases where the loss is due to negligence by a customer, she said, the customer bears the entire loss until he reports the unauthorised transaction to the bank.

Any loss occurring after the reporting of the unauthorised transaction is borne by the bank, she added.