Delhi HC seeks response from RBI on protection of online transactions
PrintListen to this Article
Under additional authentication system, banks are supposed to send one time password(OTP) to card-holder which is to be used for transaction and it is meant to ensure that card is not misused by other person when it is lost. RBI has been asking the banks to adopt second level of authentication and issued several circulars from 2009 onwards to implement it.
Alleging that some of the banks including HDFC are not providing additional protection layer for consumers, a Supreme Court lawyer has approached Delhi High Court for its implementation. The lawyer pleaded the court to direct RBI to ensure compliance of its circulars. He approached the court after HDFC had deducted excess amount in his online transaction while booking hotel room through a website without taking his consent and without sending OTP before deducting the amount.
"The case pertains to complete failure of RBI to implement its notifications/ circulars issued in 2009, 2010, 2011 and 2014 mandating the use of an additional authentication / validation system also referred to as second level authentication for online card not present (CNP) transactions. The additional authentication / validation is to be obtained using information that is not visible on the credit card itself, i.e. information known or available to the holder of the card but not printed on the card. One time passwords, internet banking passwords are second level authentication," the petitioner advocate Chirag Shroff said.
He said that CNP transactions could be vulnerable to fraudulent activities since it was difficult for merchants to verify whether the person buying a product or service using the card was actually authorized to use it as anyone privy to the information printed on card could enter the details. "In such transactions where second level of authentication is not followed by banks, only credit card number and CVV is required to be provided on the website and in case of any loss or theft of the card anyone can enter these details and carry out unauthorised transactions," he said.
Agreeing to hear his plea, a bench of Justice Rajiv Shakdher issued notice to RBI and HDFC for allegedly not putting in place authentication system for online transactions.
Responding to the legal notice sent by the lawyer for unauthorised deduction, HDFC had taken the stand that the requirement of second level of authentication was applicable for online transactions done with Indian company and his transaction was through foreign website. The bank, however, refunded the amount to him.
People are increasingly using the mode of digital transactions and Centre has set a target of of 25 billion digital transactions in the currrent fiscal year. According to a report on digital payments in India, total payments via digital instruments are expected to touch $500 billion by 2020. As per the RBI report transactions through digital means rose to Rs 124.69 trillion and the number of such transactions was 865.8 million in September last year. #casansaar (Source - PTI, Times of India)
Category : RBI | Comments : 0 | Hits : 675
RBI has issued draft rules to tighten dividend payouts by banks by linking distributions to capital adequacy, asset and profit quality, setting a uniform prudential framework effective from FY27. In the previous financial year, banks paid over Rs 75,000 crore dividend after booking record profits. Under RBI's draft rules, dividend payments by banks will be governed by a common set of conditions from FY27. The directions apply to all banking companies, corresponding new banks and SBI, and ...
Listing of an Indian company on international stock exchanges got a push with the Reserve Bank of India (RBI) coming out with regulations under Foreign Exchange Management (FEMA). Experts believe new regulations will help companies utilise foreign exchange more effectively. Regulations have been made public through two notifications. First set of regulations deals with mode of payment and reporting of non-debt instruments. “The proceeds of purchase / subscription of equity shares of an ...
The Lok Sabha elections 2024 are in full swing with electioneering adding much colour to the entire process. However, to ensure that there is no wrongdoing, the Reserve Bank of India (RBI) has sent a missive to Payment System Operators (PSOs) asking them to keep a watch on all suspicious high-value transactions that they may come across in their systems. The general purpose of the letter is to deny the use of electronic fund transfer mechanism to anyone who is intending to influence the election...
he Reserve Bank on Tuesday came out with draft guidelines to further strengthen regulations on payment aggregators, a move aimed at boosting the payment ecosystem. The draft also covers the physical point-of-sale activities of payment aggregators (PAs). The RBI said that given the growth in digital transactions and the significant role that PAs play in this space, the current directions on PAs are proposed to be updated and cover, inter alia, KYC and due diligence of merchants, operations ...
The RBI on Monday eased rules to allow resident entities to hedge their exposures to the price risk of gold using the OTC derivatives in the International Financial Services Centre (IFSC) in addition to the derivatives on the exchanges in the IFSC. Resident entities such as banks were permitted to hedge their exposure to the price risk of gold on the exchanges in the IFSC that are recognised by the International Financial Services Centres Authority (IFSCA), and the new directive provides them...
Comments