General Studies · Consumer Protection and Mis-selling
An HNW individual discovers unauthorized insurance premium debits executed via OTPs obtained by a relationship manager under the pretext of 'security updates'. Concurrently, the bank discontinued physical statements that the customer originally opted for in writing, citing sustainability goals. Under the RBI Customer Protection framework, what is the bank's liability?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank is not liable because the use of an OTP constitutes valid legal consent and paperless banking is promoted.
- 2The bank is liable for 'Mis-selling' and 'Unauthorized Transactions' as OTP consent via deception is invalid, and they cannot unilaterally stop physical statements.✓
- 3The bank is only liable for the statements, but the insurance contracts are valid since they are with a third-party company.
- 4The customer is liable for his own negligence in sharing OTPs and cannot claim any refund from the bank.
Correct answer
The bank is liable for 'Mis-selling' and 'Unauthorized Transactions' as OTP consent via deception is invalid, and they cannot unilaterally stop physical statements.
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