Fraudulent Withdrawal from Banks Doubles in FY2017-18



Moneylife Digital Team
, 20 March 2019

While the number of fraudulent withdrawals from banks have declined, in value terms it has more than doubled to Rs109.56 core in FY2017-18, the Rajya Sabha was informed.
Last month, replying to a question asked by Sukhram Singh Yadav, the then finance minister Piyush Goyal, said, "As per information furnished by Reserve Bank of India (RBI), with the proliferation of information technology (IT) and usage of related services, there has been an increase in the absolute number of complaints of withdrawing money illegally from bank accounts. As per RBI, the amount of automatic teller machine (ATM) or debit card, credit card and internet banking frauds of Rs1 Lakh and above, reported by scheduled commercial banks and select financial institutions (FIs) during 2015-16, 2016-17 and 2017-18 are Rs40.20 crore, Rs42.29 crore and Rs109.56 crore, respectively."
Strangely, when asked whether it is also a fact that the amount withdrawn illegally by cyber criminals from the accounts has to be borne by the account holders only and not by the banks, the minister replied in negative. 
 
Mr Goyal cited a circular issued by RBI on 6 July 2017 on limiting liability of customers in unauthorised electronic banking transactions. This circular was issued by the central bank following a persistent battle by Moneylife Foundation. RBI acted within two days of a unique #TweetMorcha, held to protest against banks treating customers unfairly, where protection in case of digital fraud was the first demand. The appeal was directed at the Prime Minister Narendra Modi with the hashtag #BankSeBachao. 
 
Making banks responsible to prove liability of the customer in such cases, in the circular, RBI says, in case of contributory fraud or negligence or deficiency from the bank, the customer will have zero liability irrespective of whether or not she reports the unauthorised transaction. In case of third party breach, where there is no liability on bank or the customer, and the customer reports it to the bank within three days, then also she is entitled to zero liability, the Reserve Bank says.  
 
Mr Yadav, the member of Parliament (MP) also asked about the number of lapses of cyber security which happened due to carelessness by banks. However, the minister said, the central bank did not maintain this information.  

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