RBI tightens norms for failed transactions, increases penalties to be paid by banks

If you have encountered failed transactions, you will now be eligible for a compensation from the bank. That is what the Reserve Bank of India wants the banks in India to implement.

The failure in honouring transactions could include the bank’s ATM out of cash or unable to dispense cash though you have money in your account.

As per the directive from RBI, banks there is a turnaround time (TAT) for each of these failed transactions within which the bank has to revert to the aggrieved customer and make good the error. This is even if the customer has not registered a complaint. The bank’s action must be suo motu. What’s more, the bank has to pay a compensation as well. This compensation is said to be Rs 100 per day.

This TAT norm will cover all electronic payment systems. There are eight different avenues identified by the RBI, some of which include ATMs, card transactions, immediate payment system, unified payment interface and prepaid cards.

RBI has fixed the time for redressal or TAT at between 1 day to 5 days depending on the service involved. The penalty will apply only if the bank fails to correct the error within this stipulated time. The bank will have to pay the penalty for the number of days beyond the TAT it takes to resolve the issue.

RBI says this is being done to bring in uniformity among the banks in processing of failed transactions. This will also improve the experience the customers have with their banks.

Where the bank fails to meet these obligations, the customers can approach the banking ombudsman.