Public Sector Banks Triple Fraud Compensation to Rs 140 Crore in FY24

Public sector banks reported a significant increase in compensation for e-frauds, rising to Rs 140 crore in 2023-24 from Rs 42.70 crore the previous fiscal. Union Bank of India led with the highest payouts. Customers' liability for unauthorized transactions varies based on reporting timeliness, as per RBI guidelines.

Public sector banks have seen a substantial rise in compensation payouts for frauds, escalating over three-fold to Rs 140 crore in the fiscal year 2023-24, Parliament was informed on Tuesday.

The compensation amount stood at Rs 42.70 crore in the previous fiscal, according to Finance Minister Nirmala Sitharaman, who provided these details in a written reply to the Rajya Sabha.

Union Bank of India registered the highest compensation payment at Rs 74.96 crore, followed by the Bank of India at Rs 20.38 crore, and Indian Bank at Rs 16.16 crore for FY24, she stated.

In FY23, Union Bank of India also topped the list with Rs 12.18 crore in compensations, trailed by Central Bank of India at Rs 11.68 crore.

Sitharaman highlighted that the RBI, in July 2017, instituted guidelines to limit customer liability in cases of unauthorized electronic banking transactions.

Customers incur zero liability if an unauthorized transaction occurs due to the bank's contributory fault or negligence. For non-bank system issues, liability is zero if the customer informs the bank within three working days.

If reported within 4-7 working days, customer liability ranges from Rs 5,000 to Rs 25,000. Beyond seven days, liability is determined by the bank’s policy.

If customer negligence leads to the loss, they bear the entire loss until the transaction is reported, after which the bank assumes responsibility, she added.