NPCI introduces guidelines for banks to compensate AePS fraud victims

The National Payments Corporation of India (NPCI) has introduced detailed guidelines for banks to redress frauds perpetrated on customers and merchants where a misuse or an error in biometric data or UIDAI seeding on Aadhaar Enabled Payment System (AePS) have led to a loss of funds.

The new rules effective from September 1, determines with whom financial liability rests. Whether the fraud or error resulting in a fraudulent transaction in AePS was committed by the acquirer bank, issuer bank, or any of their Business Correspondent (BC), BC agent or Customer Service Points (CSP) will be the basis of recognizing the liability.

In terms of the guidelines, if the fraud or error has been committed by the acquirer bank or its BC, BC agent, or CSP, the acquirer bank shall accept responsibility for such fraud or error in AePS and refund the transaction amount to the issuer bank. Similarly, if the fraud or error resulting in a fraudulent transaction in AePS was committed by the issuer bank or any of their BC, BC agent or CSP, in such cases issuer bank shall accept the liability and refund the transaction amount to the customer.

The guidelines will be applicable for all financial transactions in AePS such as cash withdrawal, Cash Deposit, Funds Transfer, and BHIM Aadhar, involving Business Correspondents (BC), BC agents, or Customer Service Points (CSP).

NPCI’s role will be limited to facilitate the process of reporting and handling of frauds between the members and oversee the adherence to Guidelines by the members. In case of contravention, compromise, or breach of the process, specification, guidelines lay down by Unique Identification Authority of India (UIDAI) or Aadhar data capturing and securing biometric information of the Aadhar number holder, the same will be dealt with by UIDAI in accordance with the extant rules and regulations of UIDAI and laws applicable in this regard.

Source: NPCI

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