The Indian Banking Regulator, RBI issued a notification which overhauls the Debit Card Practices of the Bank. RBI has made it mandatory that Debit Cards be issued only against Savings / Current Accounts and not against Cash Credit, Loan or Overdraft Accounts. It has further exempt banks from obtaining permission from the RBI for issuing co-branded Debit Cards in order to expedite the entire process and Banks can go ahead with the permission of their Board of Management.
Online Vs Offline Debit Cards in India
Online Debit Cards are the cards issued against your money being deposited in bank Accounts so that upon transaction their is a direct debit to the account. Offline Debit Cards are issued against your CC / OD accounts where interest rates are much lower than Credit Cards. RBI has asked all the banks to terminate Offline Debit Cards within the next 6 months.
Enhanced Security On Debit Cards / Transactions
- RBI has made it mandatory for all Online Debit Card Transactions be authenticated by a PIN at the point of sale. It is the customers responsibility not to write the PIN on Card and is required to memorize the same.
- No Point of Sale shall dispense CASH and only ATMs shall be used for CASH withdrawal
- Banks are advised to start inducting photo identity of the customer on the Debt Cards as an additional security measure
- Banks shall clearly publish and explain all the Terms & Conditions of use of Debit Card to the Customer
Dispute Settlement in Case of Debit Card Fraud
No matter how much you strengthen the system frauds do occur. So what are the rights of the Customer in Case of Loss of Debit Card or Fraud on the Card ?
- Customer is Liable to Report Loss or Fraudulent Transaction to the Bank immediately and Bank must take measures to block the card without any delay 24/7 365 days customer shall be able to reach the bank.
- Debit Card Holder shall bear the loss sustained up to the time of notification of suspicious / fraudulent activity to the bank of any loss, theft or copying of the card but only up to a certain limit (of fixed amount or a percentage of the transaction agreed upon in advance between the cardholder and the bank), except where the cardholder acted fraudulently, knowingly or with extreme negligence. [ You find it from your bank what is this Limit ? This is really a pain, as though we are negotiating a business deal with bank. ]
RBI’s Goal is clear, cashless society with more electronic transaction to improve transparency and tracking of funds, but unfortunately it only applies to small and individual common men while the influential coterie of Politicians, Bureaucrats and Businessmen continue to Launder Money right under the nose of RBI.
Reference: RBI Notification RBI/2012-13/324 DBOD.No.FSD.BC.66/24.01.019/2012-13 of 12/12/2012.