Module: | KYC, NPAs, Advances & Investment Valuations
Q211: Consider the following statements regarding the definitions and boundaries of customer negligence in electronic banking frauds:
1. Customer negligence is explicitly defined to include ignoring specific and clear warnings communicated by the bank regarding ongoing scams.
2. The act of downloading malicious applications resulting in unauthorized access to banking credentials is legally classified as customer negligence.
3. In all cases of established customer negligence, the customer bears the entire financial loss until the unauthorized transaction is officially reported to the bank.
4. The burden of proving customer negligence or liability in fraudulent electronic banking transactions rests entirely on the customer through digital forensic evidence.
Which of the statements given above is/are correct?
2. The act of downloading malicious applications resulting in unauthorized access to banking credentials is legally classified as customer negligence.
3. In all cases of established customer negligence, the customer bears the entire financial loss until the unauthorized transaction is officially reported to the bank.
4. The burden of proving customer negligence or liability in fraudulent electronic banking transactions rests entirely on the customer through digital forensic evidence.
Which of the statements given above is/are correct?
✅ Correct Answer: A
The correct answer is A. Statement 1 is correct: The framework regarding limiting liability explicitly codifies ignoring specific and clear bank warnings about scams as a direct act of customer negligence.
Statement 2 is correct: The guidelines also identify the downloading of malicious or unverified applications that compromise device security as actionable customer negligence.
Statement 3 is correct: The operational rules enforce that for established negligence (such as sharing OTPs or downloading malware), the customer is entirely liable for all financial losses occurring right up until the exact moment the fraud is reported to the bank.
Statement 4 is incorrect: The regulations strictly reverse the burden of proof, legally mandating that the burden of proving customer liability or negligence lies entirely on the bank, never on the customer.
Statement 2 is correct: The guidelines also identify the downloading of malicious or unverified applications that compromise device security as actionable customer negligence.
Statement 3 is correct: The operational rules enforce that for established negligence (such as sharing OTPs or downloading malware), the customer is entirely liable for all financial losses occurring right up until the exact moment the fraud is reported to the bank.
Statement 4 is incorrect: The regulations strictly reverse the burden of proof, legally mandating that the burden of proving customer liability or negligence lies entirely on the bank, never on the customer.