The Reserve Bank of India (RBI) on Friday said in a notification that from October, banks should bear the full cost of fraudulent transactions happening at point of sales terminals that don't comply with RBI-mandated security features.
The last date for complying with RBI's instructions is September 30 and the central bank has decided not to grant any extension whatsoever, despite various banks requesting for the same. By refusing to extent the deadline, RBI is giving a clear signal that security is crucial and it should not be compromised, said A P Hota, managing director and CEO of National Payments Corporation of India.
In the notification, RBI added the card-issuing bank should ascertain if the POS terminal was non-compliant with security features within three working days of the customer approaching the bank.
If the POS terminal is found non-compliant, the issuing bank should refund the disputed amount to the customer within seven working days. If the bank is unable to refund the amount in seven days, it will have to pay a compensation of Rs 100 per day to the customer.
"The issuing bank shall claim the amount paid by it to the customer from the respective bank/s which have acquired the POS transaction/s in question," RBI said in the notification.
The acquiring banks should pay the amount back to the issuing bank "without demur within three working days of the issuing bank raising the claim". If the claim is not settled, RBI warned that it would be "constrained to compensate the issuing bank by debiting the account of the acquiring bank maintained with it.