Banks To Pay For Card Fraud

Banks asked to pay customers for card transaction fraud---FE

Banks will have to bear the cost of fraudulent card transaction through point of sales (PoS) at merchant establishments that do not have security features prescribed by the Reserve Bank of India (RBI).

In a move to curtail rising credit card frauds, the RBI said banks not complying with security requirements should compensate the loss incurred by the card holder.

“If it is found that the PoS terminals are non-compliant as mandated, the issuing bank should pay the disputed amount to the customer within seven working days, failing which a compensation of Rs 100 per day will be payable to the customer from the 8th working day,” the RBI said in a notification issued to all banks.

Various law enforcement agencies have found cards being cloned and money withdrawn in foreign countries. There have been instances of illegal card-skimming leading to theft from other bank accounts due to problems in the authentication processes in the jurisdiction where the money was withdrawn.

The RBI had, earlier this week, asked banks to stop zero per cent EMI schemes on consumer goods purchases. It also asked banks to prevent merchants from levying fee on debit card transactions.

Refusing to relax its earlier circular on upgrading the security features at PoS, the RBI notification said it will also consider invoking the penal provisions under the Payment and Settlement Systems Act, 2007 for banks that have failed to adhere to the timeline of September 30, 2013. When a fraud is committed, the issuing bank would ascertain within three working days whether the PoS terminal is compliant with Unique Key Per Terminal or Derived Unique Key Per Transaction or Terminal Line Encryption as mandated, the RBI.

“Various banks have approached us, seeking further extension of the September 30 time line for complying with the task of securing the technology infrastructure as stated in the circular dated September 22, 2011,” the RBI said.

The RBI said the timelines indicated were decided after a series of discussions with stakeholders and no further extensions would be granted.

The RBI had earlier this year asked banks to bar international usage of cards unless specifically ask by customers.

http://www.financialexpress.com/news/banks-asked-to-pay-customers-for-card-transaction-fraud/1175484

Bank Fined For Selling Auctioned Property

Court slaps fine on bank for selling auctioned land-
TOI-29th September 2013
CHENNAI: The Madras high court has imposed an exemplary cost of 1 lakh on Indian Bank for having accepted deposit money from a third party for a property which had been auctioned and sold to another person by the bank itself.

Slamming the bankers and doubting their intentions, the court also cautioned that such conduct of a nationalised bank would result in erosion of public trust on the institution. "This conduct of the bank will certainly create a fear in the minds of the public to participate in auctions conducted by banks. By this kind of deprecatory action of the bank, the confidence level of the public in nationalised banks will certainly get diluted," observed a division bench comprising Justice K Suguna and Justice M Duraiswamy.

The matter relates to a petition filed by V S Muthupandian and S Chandresan saying though they were the confirmed auction purchasers of a property mortgaged to the Thousand Lights branch of Indian Bank, the bank authorities had received deposit money from third parties and did not give them possession of the land. They charged the bank with attempting to defraud them as well as creditors.

Manickchand Balecha and Kiran Kanwar, who were guarantors and owners respectively of the property, however, told the court that the authorised officer of the bank had played fraud as they had neither availed themselves of any loan nor did they stand guarantors for any loan secured by any person.

Smelling fraud, the division bench pointed out that the Debts Recovery Appellate Tribunal (DRAT) had set aside the auction sale on the ground that Manickchand Balecha and Kiran Kanwar had never deposited the original documents of the property to the bank.

Wondering what prevented the duo from establishing their case before the Debts Recovery Tribunal (DRT) and not the DRAT, the judges blamed the bank for the chaos. "The bank is the sole cause for all these chaos and confusion."

Directing the bank to immediately return the money received from the third parties, the judges said: "In order to prevent nationalised banks from involving themselves in unhealthy practice, as in the present case, at least in future, this cost of 1 lakh is imposed on the bank, to be paid to the third party."

http://timesofindia.indiatimes.com/city/chennai/Court-slaps-fine-on-bank-for-selling-auctioned-land/articleshow/23226394.cms

Nagpur-based coal contractor booked for filing Rs 1.5 crore fake bank guarantee

YAVATMAL: Wani police on Friday booked a Nagpur-based coal contractor for filing fake bank guarantee to the tune of Rs 1.5 crore for getting the work in the Ghonsa coal field under Wani North Area sector of Western Coal Limited (WCL).

According to police sources, Sandeepsingh Tejpalsing Arora, the director of BNS Infra, bagged the work after furnishing a bank guarantee of Rs1,45,73,548 to WCL.

An enquiry conducted by senior WCL officials found that the accused allegedly forged the name of the bank manager and his signature on the fake bank guarantee.

Wani North Area Manager Pavankumar Laxmikant Mishra has lodged a complaint with the Wani police station. The police have booked Arora under sections 420, 467, 468 and 471 of the IPC.

Wani police confirmed the receipt of the complaint and said that they would arrest the accused if they find any evidence against Arora.

http://timesofindia.indiatimes.com/city/nagpur/Nagpur-based-coal-contractor-booked-for-filing-Rs-1-5-crore-fake-bank-guarantee/articleshow/23225587.cms