Effective date:
Introduction
Technological progress in payment and settlement systems and the qualitative changes in the operational systems and processes undertaken by various banks have enabled Banks to improve efficiencies in providing better service to its customers.
Paytm Payments Bank Limited (PPBL) being a Bank which has robust system of payment and settlement with operations systems and processes at par or better than other financial institutions. Technological progress in payment and settlement systems have enabled banks to improve efficiencies in providing better service to customers. It is bank’s endeavor to offer services to its customers with best utilization of technology and to improve efficiencies to provide better services to the users and providing protection to its customers. Customer protection guidelines have been issued by regulator(s).
2. Customer Limited Liability and Protection Policy
Keeping in mind the increasing thrust on financial inclusion & customer protection, the Reserve Bank of India had issued a circular on Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions (RBI/2017-18/15 DBR.No.Leg.BC.78/09.07.005/2017- 18 dated July 6, 2017) and Master circular on Customer Service in Banks (July 2015), as amended from time to time which inter-alia requires Banks to formulate a Board approved policy in regard to customer protection and compensation in case of unauthorized electronic banking transactions such as Erroneous Debits arising on fraudulent or other transactions and other unauthorized actions of the bank leading to a financial loss to customer.
The electronic banking transactions can be divided into two categories:
- Remote/ online payment transactions (transactions that do not require physical payment instruments to be presented at the point of transactions e.g. internet banking, mobile banking, card not present (CNP) transactions), Prepaid Payment Instruments (PPI), and
- Face-to-face/ proximity payment transactions (transactions which require the physical payment instrument such as a card or mobile phone to be present at the point of transaction e.g. ATM, POS, etc.)
This policy covers transactions only through the above modes. The policy excludes electronic banking transactions effected on account of error by a customer (e.g. NEFT/IMPS/RTGS carried out to an incorrect payee or for an incorrect amount), transactions done under duress, claims due to opportunity loss, reputation loss, other incidental costs or collateral damage. This policy is applicable to entities that hold relationships with the bank. This policy is not applicable to
- Non-Customer that use Bank’s infrastructure e.g. ATMs, electronic wallet
- Entities that are part of the ecosystem such as interchange organizations, Franchises, Intermediaries, Agencies, Service partners, Vendors, Merchants etc.
This policy is based on principals of transparency and fairness in the treatment of our customers. Customer shall be compensated in line with this policy in case of loss occurring due to unauthorized transactions.
This Compensation Policy of the Bank covers areas relating to:
- Customer Limited liability & Protection policy
- Zero Liability of Customers
- Limited Liability of Customers
- Complete Liability of Customers
- Reversal Timelines
- Delay in Credit/return of NEFT/RTGS transactions on part of the bank’s systems and/or processes
- Automated Teller machines (ATMs) including Micro ATMs.
- Card Transactions
- Debit Card disputed transactions
- Immediate Payment System (IMPS)
- Unified Payments Interface
- National Automated Clearing House (NACH)
- Wallet
- Aadhaar Enabled Payment System (AePS)
- Levy of excess service charges
- Mis selling of Third Party Products
- Service gesture Credits.
- Compensation for service related Deficiencies
- Burden of Proof
- Award of Compensation
- Other Regulatory Requirement
- Delegated Authority
- Force Majeure
- Violation of the Code by Bank’s Employees and Agents
3. Definitions of Certain Terms used
3.1 Deficiency
Sec. 2(11) of The Consumer Protection Act, 2019, defines the term Deficiency as any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service and includes— (i) any act of negligence or omission or commission by such person which causes loss or injury to the consumer; and (ii) deliberate withholding of relevant information by such person to the consumer.
3.2 Service
3.2.1 Sec. 2(42) of The Consumer Protection Act, 2019 defines that service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.
4. Objective of the Policy
The objective of this policy is to
- Establish a system which specify the compensation to customers for directly measurable financial losses which customer might have incurred due to deficiency in services on the part of Bank or any act of omission or commission directly attributable to the Bank. Bank shall ensure that the customer is compensated without having asked for it. The Bank will be transparent, fair and efficient in providing compensation to its customers.
- This policy prescribes compensation only for financial losses incurred by customers due to deficiency in service by the bank and which can be measured directly. The commitments under this policy are without prejudice to any right the Bank who will have in defending its position before any forum duly constituted to adjudicate banker-customer disputes.
5. Various Liabilities of a Customer:
5.1 Zero Liability of customer
- Customer shall be entitled to full compensation of real loss in the event of contributory fraud/ negligence/ deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer)
- Customer has Zero Liability in all cases of third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorised transaction
5.2 Limited Liability of customer
Liability in case of financial losses due to unauthorized electronic transactions where:
- responsibility for such transaction lies neither with the bank nor with the customer, but lies elsewhere in the system AND
- there is a delay on the part of customer in notifying/reporting to the Bank beyond 3 working days and less than or equal to 7 working days (after receiving the intimation from the Bank)
The liability of the customer shall be limited to real loss or amounts mentioned in the below, whichever is lower:
Table - 1
| Type of Account | Maximum liability (₹) |
|---|---|
| BSBD Accounts | 5000 |
| 10000 |
| All other Current/ Cash Credit/ Accounts | 25000 |
Overall liability of the customer in third party breaches where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, the liability of the customer shall be as per below table:
Table - 2
| Time Taken to report the fraudulent transaction from the date of receiving the communication | Customer’s Liability (₹) |
|---|---|
| Within 3 Working days | Zero Liability |
| Within 4 to 7 Working days | The transaction value or the amount mentioned in Table-1 above whichever is less. |
| Beyond 7 Working days | As per bank’s Board approved policy |
The number of working days mentioned in Table 2 shall be counted as per the working schedule of the bank excluding the date of receiving the communication.
5.3 Complete Liability of customer
- Customer shall bear the entire loss in cases where the loss is due to negligence by the customer, e.g. where the customer has shared payment credentials or Account/Transaction details, viz. Internet Banking user Id & PIN, Debit/Credit Card PIN/OTP or due to improper protection on customer devices like mobile / laptop/ desktop leading to malware / Trojan or Phishing / Vishing attack. This could also be due to SIM deactivation by the fraudster. Under such situations, the customer will bear the entire loss until the customer reports unauthorised transaction to the bank. Any loss occurring after reporting of unauthorised transaction shall be borne by the bank.
- In cases where the responsibility for unauthorized electronic banking transaction lies neither with the Bank nor with the customer, but lies elsewhere in the system and when there is a delay on the part of the customer in reporting to the Bank beyond 7 working days, the customer would be completely liable for all such transactions
5.4 Reversal Timelines
- The Bank shall afford shadow credit to the customer account within 10 working days from the date of reporting in all cases as per above statements.
- Within 90 days of the date of reporting, the Bank shall either establish customer negligence or provide final credit to the customer. The customer will be given value dated credit (based on the date of unauthorized transaction) when the customer becomes eligible to be compensated. In case of debit card/ bank account, the customer shall not suffer loss of interest
Other Points:
- Customer would not be entitled to compensation of loss if any, in case customer does not agree to get the card hot listed or does not cooperate with the Bank by providing necessary documents including but not limited to police complaint
- Compensation would be limited to real loss after deduction of reversals or recoveries received by the customer. The Committee on Customer Service shall periodically review the unauthorised electronic banking transactions reported by customers or otherwise, as also the action taken thereon, the functioning of the grievance redressal mechanism and take appropriate measures to improve the systems and procedures. All such transactions shall be reviewed by the bank’s internal auditors.
6. Delay in credit / return of NEFT / RTGS transactions on part of the bank’s systems and/or processes:
| Required Action | Compensation | Turnaround Time (TAT) |
|---|---|---|
| Bank Customer account to be credited immediately, if transaction is still pending | compensation for interest loss at the RBI LAF Repo Rate plus two percent for the period of delay / till the date of refund as the case may be to the affected customers’ account without waiting for a specific claim to be lodged by the customer in this regard. Compensation to the extent of the financial loss to the customer by way of reduction in the minimum balance applicable for payment of interest on savings bank deposit or return of an issued cheque due to insufficient balance | Verification: Verification: Third party involvement (including other banks) - Within 1 month No third-party involvement - Within 7 working days Credit to the account: Immediately post verification Compensation: |
*Customer liability will be as per RBI guidelines
7. Automated Teller Machines (ATMs), including Micro-ATMs
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Customer’s account debited but cash not dispensed | Pro-active reversal (R) of failed transaction within a maximum of T + 5 days. | ₹ 100/- per day of delay beyond T + 5 days, to the credit of the account holder. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
8. Card Transaction
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Card to card transfer Card account debited but the beneficiary card account not credited. | Transaction to be reversed (R) latest within T + 1 day, if credit is not effected to the beneficiary account. | ₹ 100/- per day of delay beyond T + 1 day. |
| 2 | Point of Sale (PoS) (Card Present) including Cash at PoS Account debited but confirmation not received at merchant location i.e., charge-slip not generated. | Auto-reversal within T + 5 days. | ₹ 100/- per day of delay beyond T + 5 days. |
| 3 | Card Not Present (CNP) (e- commerce) Account debited but confirmation not received at merchant’s system. | Auto-reversal within T + 5 days. | ₹ 100/- per day of delay beyond T + 5 days. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
9. Debit Cards-disputed transactions
The Debit Card holder shall be responsible for all transactions approved on his/her debit card prior to report of the loss to the Bank as per bank’s Debit card terms and conditions, as amended from time to time and prevalent at the time of such event. Transactions reported as erroneous by customers in respect of debit card operations which require specific reference to a merchant establishment will be handled as per Chargeback rules laid down by Cardholder instrument.
10. Immediate Payment System (IMPS)
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Account debited but the beneficiary account is not credited. | If unable to credit to beneficiary account, auto reversal (R) by the Beneficiary bank latest on T + 1 day. | ₹100/- per day if delay is beyond T + 1 day |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
11. Unified Payments Interface (UPI)
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Account debited but the beneficiary account is not credited (transfer of funds). | If unable to credit the beneficiary account, auto reversal (R) by the Beneficiary bank latest on T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| 2 | Account debited but transaction confirmation not received at merchant location (payment to merchant). | Auto-reversal within T + 5 days. | ₹100/- per day if delay is beyond T + 5 days. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
12. National Automated Clearing House (NACH)
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Delay in crediting beneficiary’s account or reversal of amount. | Beneficiary bank to reverse the uncredited transaction within T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| 2 | Account debited despite revocation of debit mandate with the bank by the customer. | Customer’s bank will be responsible for such debit. Resolution to be completed within T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
13. Prepaid Payment Instruments (PPIs) Card/ Wallet
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Off-Us transaction The transaction will ride on UPI, card network, IMPS, etc., as the case may be. The TAT and compensation rule of respective system shall apply. | Reversal effected in Remitter’s account within T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| 2 | On-Us transaction Beneficiary’s Beneficiary’s PPI not credited. PPI debited but transaction confirmation not received at merchant location. | Reversal effected in Remitter’s account within T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
14. Aadhaar Enabled Payment System (AePS)
| S. No. | Description of the Incident (For reasons not attributable to the customer) | Framework for auto-reversal and compensation | |
|---|---|---|---|
| Timeline for auto- reversal** | Compensation payable | ||
| 1 | Account debited but transaction confirmation not received at merchant location. | Acquirer to initiate “Credit Adjustment” within T + 5 days | ₹100/- per day if delay is beyond T + 5 day. |
| 2 | Account debited but beneficiary account not credited. | Acquirer to initiate “Credit Adjustment” within T + 5 days | ₹100/- per day if delay is beyond T + 5 day. |
**T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer / originator.
15. Levy of excess service charges
The bank would debit the customer’s account with any applicable service charge as per the schedule of charges notified by the bank. In the event the bank levies any charge in violation of the arrangement, the bank will reverse the charges with value when pointed out by the customer subject to scrutiny of agreed terms and conditions and such other terms and conditions as may be communicated from time to time.
16. Mis-selling of third party products
In the event of Bank receiving of any complaint from the customer regarding mis-selling of the third party products by the Bank, or about having engaged in any improper conduct or about having acted in violation of any Code adopted by the Bank, the Bank will take appropriate steps to investigate and to handle the complaint within one month of the receipt of the complaint.
In cases in which lapses by the Bank employees are established, the Bank will compensate the customer suitably, based on the facts and circumstance
17. Service Gesture Credits:
The Bank reserves the right, at its discretion, to waive off charges or credit amounts to a customer's account as a gesture of goodwill. Such decisions will be made on a case-by-case basis and might require consensus among the relevant departments depending on the specific situation. These service gestures aim to enhance customer satisfaction and address exceptional cases where standard procedures may not apply.
18. Compensation for Service-Related Deficiencies:
The Bank is committed to delivering prompt, courteous, and fair service across all customer touchpoints. However, in rare instances where service delivery falls short and results in inconvenience or monetary/non-monetary loss to the customer, the following guidelines shall apply for compensation. Cases where the customer has approached the Bank for compensation citing deficiencies in customer service including, but not limited to:
- Inordinate delay in resolution of queries, requests, or complaints.
- Miscommunication or lack of response from the Bank’s representatives.
- Erroneous or misleading information leading to customer loss or inconvenience.
- Failed commitments regarding callback timelines, complaint resolution, or promised action.
- Multiple follow-ups due to inefficient handling of issue.
Each case shall be assessed individually, guided by the principles such as (a): Actual Impact on Customer: Both financial and non-financial impacts (time lost, reputational damage, etc.) will be considered. (b) Effort by Customer: Number of follow-ups or escalations made by the customer. (c) Bank’s Lapses: Extent of deviation from expected service standards. (d) Rectification Effort: Whether the Bank made reasonable efforts to resolve the issue.
Depending on the nature and severity of the issue accessed internally by the Bank, Bank may review and extend compensation through one or more of the following methods:
- Interest Based Compensation: For cases involving delays in processing financial transactions or closure of instruments, compensation may be computed using the applicable Savings Account or Fixed Deposit interest rate on the amount available in the affected instrument
- Nominal Monetary Compensation: As a goodwill gesture in cases involving non-monetary inconvenience (eg. missed callbacks, excessive delays, lack of communication etc.), a fixed token amount (within defined threshold of INR 1000) may be created to the customer’s account.
All compensation shall be subject to prior review and approval by the Head of Department, Internal Ombudsman or any other relevant authority, based on the nature and context of the issue.
19. Burden of Proof
The burden of proving customer liability in case of unauthorized electronic banking transactions shall lie on the bank.
20. Award of Compensation
The compensation as per this Policy is payable to a customer only in those cases where any act of omission or commission is directly attributable to the Bank.
The award of compensation shall be made only on well recognized legal principles governing quantification of damages or compensation on proof of actual loss suffered.
Further, the compensation shall be paid only in such cases where the loss could be quantified in terms of money. Therefore, no claim could be considered based on qualitative aspects like reputation damages, loss of image in the society, loss of business, loss of income, etc. in cases where the loss cannot be measured directly.
In case of compensations payable against deficiency in the services provided by an agency nominated by the Bank on account of an outsourced activity, the compensation shall be the same as prescribed in this Policy.
The compensation shall be made by putting in place a mechanism which will replicate back-valuing the affected transactions and the amount of compensation, in any case, shall be limited to the financial loss of the customer arising out of amount in the books of the Bank only.
21. Other Regulatory requirement:
Regulatory requirement also require to cover aspects of customer protection, including the mechanism of creating customer awareness on the risks and responsibilities involved in electronic banking transactions. As per Regulatory requirement, bank shall ensure to have,
- Appropriate systems and procedures to ensure safety and security of electronic banking transactions carried out by customers;
- Robust and dynamic fraud detection and prevention mechanism;
- Mechanism to assess the risks (for example, gaps in the bank’s existing systems) resulting from unauthorized transactions and measure the liabilities arising out of such events;
- Appropriate measures to mitigate the risks and protect themselves against the liabilities arising therefrom; and
- A system of continually and repeatedly advising customers on how to protect themselves from electronic banking and payments related fraud.
- Customers to mandatorily register for SMS alerts and wherever available register for e-mail alerts, for electronic banking transactions.
- Bank shall send SMS alerts shall mandatorily be sent to the customers, while email alerts may be sent, wherever registered. To facilitate this, banks must provide customers with 24x7 access through multiple channels (at a minimum, via website, phone banking, SMS, e-mail, IVR, a dedicated toll-free helpline, reporting to home branch, etc.)
- The customers shall be advised to notify bank of any unauthorized electronic banking transaction at the earliest after the occurrence of such transaction, and informed that the longer the time taken to notify the bank, the higher will be the risk of loss to the bank/ customer.
- Bank shall provide, a direct link for lodging the complaints, with specific option to report unauthorized electronic transactions shall be provided by banks on home page of their website. And Bank shall ensure that immediate response (including auto response) is sent to the customers acknowledging the complaint along with the registered complaint number.
22. Delegated Authority
The delegated authority for settlement of claims arising out of unauthorised / erroneous direct debits / fraudulent transactions made in customer’s account is vested only with senior / top executives functioning in Head Office.
23. Force Majeure:
The bank will not be liable to compensate customers under this policy if some unforeseen event (including but not limited to civil commotion, sabotage, lockout, strike or other labor disturbances, accident, fires, natural disasters or other “Acts of God”, war, damage to the bank’s facilities or of its correspondent bank(s), absence of the usual means of communication or all types of transportation, etc.) beyond the control of the bank prevents it from performing its obligations within the specified service delivery parameters.
24. Violation of the Code by Bank’s Employees and Agents
In the event of receipt of any complaint from the customer that the Bank’s employee / representative / agency has engaged in any improper conduct or acted in violation of the Code of Bank’s commitment to Customers, the Bank shall compensate to the customer, on merit of the individual cases, the financial losses for the act of such employee / representative / agency after proper investigation.
25. Policy Revision
- The Customer Service department shall be responsible to own, maintain and update this policy.
- Any revisions to the policy may seek inputs from Operations, Risk, Finance, Compliance and other concerned departments of the Bank.
- This policy shall undergo an annual review and approval process by the Board. If any change in this policy is subsequently approved, consequent upon any change in regulatory guidelines, market conditions, etc., such changes and approvals shall be deemed to be part of the policy until the policy and framework are comprehensively reviewed. All such interim changes shall be approved by the Board.
26. Regulatory Reporting and Monitoring Requirements:
As per Regulatory requirement, the Bank shall:
- Put up periodical report to the Board, the customer liability cases including volume/ number of cases and the aggregate value involved and distribution across various categories of cases viz., card present transactions, card not present transactions, internet banking, mobile banking, ATM transactions, etc.
- Put up periodical report to The Standing Committee on Customer Service in the bank for periodically review of the unauthorized electronic banking transactions reported by customers or otherwise, as also the action taken thereon, the functioning of the grievance redress mechanism and take appropriate measures to improve the systems and procedures. All such transactions shall be reviewed by the bank’s internal auditors
27. Disclaimer Clause
Bank will ensure that under no circumstances the compensation amount to be paid out to a specific customer does not exceed the actual amount of nominal financial loss subject to relevant RBI guidelines and awards/directions given by any court of flaw/statutory bodies.
28. Regulatory References
- RBI Master Circular on Customer Service in Banks dated July 1, 2015
- Draft Circular on Customer Protection dated August 11, 2016
- RBI circular on customer Protection – Limiting Liability of Customers in Unauthorized Electronic Banking Transactions dated July 6, 2017
- IBA Model Compensation policy
- IBA Fair Practice Code
- IBA Model Customer Rights Policy
- BCSBI Code of Commitment to Customers
- RBI circular on 'Operation guidelines for Payments Bank' dated October 6, 2016
- RBI circular on Harmonization of Turn Around Time (TAT) and customer compensation for failed transactions using authorized Payment Systems dated September 20, 2019
29. Disclaimer
In the event of any conflict between the "Customer Compensation Policy" of the PPBL in the English language listed at https://www.paytm.bank.in/Policies/Customer-Compensation-Policy-for-Paytm-Payments-Bank and the translated version of the "Customer Compensation Policy" in concerned local language updated on PPBL website, the English version shall prevail.