New Delhi (Agency): A parliamentary panel has made a significant recommendation calling for financial institutions to provide immediate compensation to victims of cyber fraud. The panel believes that this step will demonstrate a firm commitment to consumer protection and encourage institutions to strengthen their security measures.
The Standing Committee on Finance, headed by BJP MP Jayant Sinha, has suggested an “automatic compensation system” as devised by the Reserve Bank of India (RBI). According to the recommendation, it should be the sole responsibility of financial institutions to promptly compensate victims of cyber fraud while further investigation and fund traceability are underway.
The committee’s report, which was recently tabled in the Lok Sabha, highlights the importance of addressing cybercrime and providing an effective grievance and redressal mechanism for consumers. The proactive approach aims to safeguard customer interests and ensure swift resolutions in cases of financial cybercrime.
Jayant Sinha clarified that consumers who file complaints of cybercrime should automatically receive the money back into their accounts, up to a certain limit. Financial institutions will then be responsible for investigating the crime and pursuing the perpetrators to ensure that consumers receive immediate justice.
In addition, the panel proposes extending the time frame for reporting cyber fraud from three to seven days to allow victims sufficient time to report the crime and seek redressal.
The committee firmly believes that implementing this compensation system will enhance consumer protection, boost confidence in the financial system, and motivate financial institutions to adopt robust fraud prevention strategies. By shielding customers from evolving cyber threats and providing necessary safeguards for their financial wellbeing, the system will help ensure a safer banking environment.
The report also raises concerns about customers not receiving SMS notifications when transactions occur in their accounts. This lack of information leaves room for potential crimes and fraudulent activities to go unnoticed. To address this issue, the panel recommends that financial institutions and service providers establish and implement robust SMS notification systems to promptly alert customers about any account activity.
With cyber threats on the rise, the parliamentary panel’s recommendations could have a significant impact on enhancing consumer protection and ensuring quick remedies for victims of cyber fraud. The proposal aims to strengthen the confidence of consumers in the financial system while holding financial institutions accountable for securing their customers’ interests.