The Reserve Bank of India (RBI) has issued a draft circular outlining new guidelines for digital banking.
The proposed rules emphasise enhanced customer protection, transparency, and informed consent, while also introducing risk mitigation measures to safeguard users against fraud.
According to the draft, banks will no longer be allowed to mandate the use of digital channels for accessing banking services. This means customers cannot be compelled to opt for digital platforms to avail of essential banking services such as the issuance of debit cards. The RBI reiterated that digital banking must remain a choice, not a requirement, and banks must provide alternative channels to accommodate customer preferences.
Digital banking, which includes services offered through websites, mobile applications, and other electronic platforms, has become a central mode of banking in recent years. With this increased reliance, the RBI is focusing on ensuring robust customer protection frameworks.
The guidelines mandate that banks adhere to existing customer protection norms, particularly regarding liability in cases of unauthorised electronic transactions. “Banks shall comply with the guidelines on customer protection, including limiting of liability in unauthorised electronic banking transactions,” the central bank stated.
One of the key provisions in the draft guidelines relates to high-net-worth individuals. Customers with a net worth exceeding Rs 50 crore, or the minimum regulatory requirement, whichever is higher, as of March 31 of the preceding financial year, must obtain prior approval from their bank before being granted access to digital transactional services. This measure, the RBI noted, is intended to ensure due diligence and regulatory compliance in high-value transactions.
The draft circular also stresses the importance of obtaining explicit, documented consent from customers before offering any digital banking service. To enhance transparency, banks are required to issue SMS or email alerts to registered mobile numbers or email addresses for both financial and non-financial activities conducted on customer accounts.
To make terms and conditions more accessible, the RBI has directed banks to present all service-related information in simple and clear language. These should be made available in English, Hindi, and the local vernacular, enabling customers to make informed decisions regardless of linguistic background.
A strong emphasis has also been placed on risk mitigation. Banks are instructed to tailor their fraud prevention mechanisms based on transaction limits, frequency, and customer behaviour. These strategies may include limits on daily, weekly, or monthly transactions, and fraud detection tools that can flag suspicious activities.
The RBI has further recommended a comprehensive transaction monitoring and surveillance system that analyses customer behaviour to detect anomalies. In cases of unusual transactions, banks may be required to seek prior confirmation from the customer as part of their fraud risk management policy.
Through this initiative, the RBI aims to foster a more secure and user-friendly digital banking environment. The proposed guidelines not only prioritize consumer safety and transparency but also seek to maintain the integrity of the banking system in the face of increasing digitalization. If effectively implemented, the draft regulations are expected to boost customer trust and encourage the responsible expansion of digital banking services across the country.
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