Banking · Customer Liability and Banking Security
An unauthorized RTGS transfer occurred from a current account after net-banking credentials were stolen via a Trojan virus on the customer's computer. However, the bank processed the transaction without sending a mandatory Two-Factor Authentication (2FA) OTP due to a technical failure in its SMS gateway. According to RBI guidelines on limiting customer liability, who holds zero liability?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The customer is fully liable because the original security breach originated from their compromised computer.
- 2The customer has zero liability because a system deficiency in the bank's authentication mechanism allowed the transaction.✓
- 3Liability is shared equally between the bank and the customer.
- 4The customer liability is capped at a maximum fixed penalty of ₹25,000.
Correct answer
The customer has zero liability because a system deficiency in the bank's authentication mechanism allowed the transaction.
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