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Fraudulent and unauthorized transactions at ATM
  • By: admin
  • Date: 12 Feb 2020
  • Banking
  • Comments:
  • Views:160
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With the rise of ATM frauds in the country, several customers have expressed concern to tackle such incidents as they are unaware of such scams. To avoid ATM frauds means to covert the keypad as you enter your Personal Identification Number (PIN). As technology evolves, financial scammers update their methods accordingly. It is difficult to prevent frauds in case of Card Skimming, Stealing of Plastic Card, Card Trapping, Cash Shimming, ATM malware, Card Cloning, etc.

Measures to avoid ATM Frauds:

Avoid sharing card or PIN with anyone. The spouses who share a bank account should have different PINs for their debit cards.

Examine the ATM machine before using it, wiggle the card reader or PIN pad. If it appears loose or falls off the machine, it may indicate the presence of skimmer. If any abnormal activity is found or notices a hidden camera, the person should inform the bank staff or police immediately.

If the person is seen using more than one card or is tampering with the machine, do not use the ATM machine or complaint to the bank or police.

Be aware of the fake calls and SMS or emails that claim to be from your financial institution. 

Banks always offers features relating to security; everyone should take advantage of it.

If a debit card is lost or stolen, or information like PIN Card or online banking login has been compromised, one should immediately inform the bank about the incident.

Make a habit of reviewing online account activity or checking the bank statements.

The user should block the card by visiting the bank as soon as he receives a message pertaining to the fraud transaction.


What to do in case of debit card fraud?

The moment a person realizes about the suspicious transaction on a debit card or credit card or any should inform the card issuer immediately and should undertake the following steps:

While filing a written complaint with the bank or card issuer, make sure you carry the following documents along with you:

  • Bank statement of the concerned bank of last six months.
  • Copy of SMS received of the alleged transactions.
  • Copy of ID proof and address proof, as mentioned in bank records.
  • Lodge a complaint in the nearest police station explaining the complete incidence.

After informing the bank about the fraudulent transaction, one should file a written complaint with the nearest Police Station.


As per RBI rules, if a fraud takes place and the bank is not at fault, and the third party committed the act, then the customer is not required to pay, if reported the bank within three days of the fraudulent transaction. A transaction reported after that but within seven days, the liability of customer for the per transaction will be limited to the transaction value or an amount set by the Central Bank, whichever is lower.

RBI notifies that after seven days, the customer liability shall be determined as per the bank’s policy.

As per RBI rules, after informing the bank, the resolution has to be over within 90 days. Bank has to reverse the unauthorized electronic transaction back to the customer’s account within ten working days from the date of notification.

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Plastic Money and their Advantage & Disadvantages

By: Banking 29 Jul 2019

Plastic Money

Plastic money is a term used to represent the hard plastic cards used in day to day life in place of actual banknotes. They come in several forms such as debit cards, credit cards, store cards and pre-paid cash cards. The plastic cards began to be used widely after 1970 when the specific standards were set for a magnetic strip. In 1981, the concept of Credit cards was introduced in India and was on the verge of an exceptional boom.

Today the domestic card industry is applied with different types of cards from gold, silver, global, smart to secure, co-branded credit cards, etc. the list is endless. There is enormous growth potential in the domestic card industry. 

Types Of Plastic Money

Charge Card: A charge card has similar features of credit cards. However, after using a charge card,  it is necessary to pay the whole amount of bill till the due date. If the person defaults to pay the amount of the charge card, then he has to pay the late payment charges. 
Visa & MasterCard: Visa & MasterCard are international non-profit organizations. They are dedicated to promoting the growth of the business of cards across the globe. They have designed a wide network of merchant institutions by keeping in mind that the customers might use their credit cards to make several transactions worldwide.

Debit Cards: The debit card is an encoded plastic card which is issued by banks and has replaced with the cheques. It allows the customers to pay in exchange for goods and services without carrying cash. It is a multipurpose card, as it can be used as an ATM to withdraw the money and check the balance of the bank account. It is issued by bank free of cost with the savings or current account. It is one of the best online-payment tools where the amount of purchase is immediately subtracted from the account of the customer and credited to the merchant’s account. It has overcome the delay in the payment process. 

There are presently two ways in which debit cards transactions are processed:
  1. Online debit (also known as a PIN)
  2. Offline debit (also known as signature debit)

ATM Cards: These cards are typically used at ATMs to withdraw money, transfer funds and make deposits. ATM cards are used by inserting the card into a machine and enter a PIN or personal number for security purpose. The system checks the account for sufficient funds before allowing any transaction.

Advantages Of Plastic Money

Convenience: Plastic money provides an easy way to make financial transactions without carrying cash. It also provides the benefits of anywhere and anytime banking.

Check Counterfeiting: The proposed plastic currency notes will reduce the chances of counterfeiting.

Long life of Plastic Currency Notes: The proposed plastic currency notes will have the life of five years as against one-year life of paper currency notes.  

Check on Black Money: It is possible to trace the financial transactions done through cards. Developing a culture of plastic money will make it easy for the government to trace black suspected black money sources. 

Supports Growth of E-commerce: The use of cards has supported the growth of e-commerce. Growth of e-commerce enhances cost-effectiveness and alternative channels to improve economic growth. 

Power of Purchasing: Debit or Credit cards made it easier to buy things. Now we do not have any need to carry money in a large amount. Plastic money is accepted at any time and everywhere.

Time-Saving: one can purchase anything from any place through a credit card or debit card without spending money on fare or cash transaction. You have to provide your card details to seller store or corporations and settle your order. It saves time in the transaction by debit and credit card. 

Safety: In case, if an individual loses the cards, then he/she may contact the bank or financial institution, which provide the cards. The financial institution or bank will block the account and no-one can draw a single penny without your permission.

Disadvantages Of Plastic Money

Shops using other Vendors: Numerous shops accept credit cards of a specific company only. In this situation, money is the only mode of payment for those who use a credit card of another company.

Less Availability: There are several cases where the firms do not let their cards to be utilized in specific areas wherever they have a regional dispute.

An issue with Magnetic Strip: The Credit card consists of the magnetic strip that can get worn out due to extensive use of it. If it happens while travelling, and credit card is the only form of money with the person, then he/she must wait till the time they receive a new card. The new card may take a minimum of forty-eight hours to get active.

Increased Debt and rates of high-interest: Credit Card from Corporations and financial institutions charge high-interest rate on more money if the person fails to pay off till the fixed date of the particular month. These interests are the earnings, for which they provide the additional shopping for limits then the money. It is not a good idea to owe loan on high-interest rates and spend it in necessary things or purchasing. 

Fraud: In the case of stolen credit cards, the thief may use it directly to get the information. In today’s world, it is possible to get a clone of any debit or credit card, which works like original and can be a substantial loss. Thus be aware of the frauds of credit cards.

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Bankruptcy & Insolvency in India

By: Ayantika Mondal Banking 19 Sep 2019

Previously, the situation of insolvency and bankruptcy law seemed to be weak as compared to the expected state as it was bifurcated in different acts to deal with it in India. It was very important to enact a single act in order to deal with all insolvency and bankruptcy cases. Earlier,  various acts were applied for conducting or proceeding the application for Insolvency and Bankruptcy, also many cases were found in Sick Industrial Companies (Special Companies) Act, 1985, The Recovery of Debts by Banks and Financial Institutions Act, 1993, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Companies Act, 2013 due to this there were multiple cases filed for the same purpose under different heads. This futility of filing cases led to uncertainty in deciding the solution for cases. The statutes under which the cases were filed, resulting in forming a various board to deal with this matters, i.e. Board for Industrial and Financial Reconstruction, Debt Recovery Tribunal, Debt Recovery Appellate Tribunal, National Company Law Tribunal and National Company Law Appellate Tribunal.

All the mentioned petitions eventually were handled by the High Courts. The individual filings for insolvency were filed under Presidency Town Insolvency Act, 1909 and Provincial Insolvency Act, 1920.

Considering all the authorities and their functioning led to undue delays ambiguity and further discrepancies making the process futile and unending, cause trouble in further development in the economy of the country.  It was essential to come with laws that deal with all the matters where the conclusion expected from the facts is to be the same.

What is Bankruptcy?

When an organisation is unable to manage its financial obligations or make payment to its creditors, an organisation files for bankruptcy in the court of law, a petition is filed in the court for the same where all the outstanding debts of the company are measured and paid out from the company’s assets.

Insolvency and Bankruptcy Code:

Section 79 (4) "bankruptcy" means the state of being bankrupt; (the state of being completely lacking in particularly good quality.)

Two primary objectives of bankruptcy are;

  1. To conduct a fair settlement of the legal claims of the creditors with an equitable distribution of debtor's assets, and 
  2. To provide the debtor with an opportunity for a fresh start.

Bankruptcy can amount to a business-failure, but not voluntary winding up. The Government of India has implemented the Insolvency and Bankruptcy Code (IBC) to strengthen all laws related to insolvency and bankruptcy and to tackle the problem of Non-Performing Assets (NPA) that has been dragging the Indian economy down for many years. As stated in Swiss Ribbons Pvt. Ltd. v/s Union Of India, that Insolvency and Bankruptcy Code is a consolidated code for all the matter related to insolvency and reorganization of Corporate entity dealt by an authority appointed under the code.

Companies not only generate employment but also create economic growth on a large scale. It is essential to bring in a mechanism to settle entities driving into bankruptcy, without causing damage to the economy. That's where IBC came in.

Before the initiation of IBC, the companies took about five to six years with respect for the dissolution of its operations; the number has dropped to a year nowadays. It helps to increase the ease of doing business and also to develop a stronger sense of trust in investors and lenders.

There have been significant debates, whether the implementation of IBC is a boon or a bane. The whole process of insolvency and liquidation is always in the hands of the debt holders and shareholders. Generally, by the time the entire process is completed, the assets are eroded with very few left for distribution.

The IBC has flagged the way for a significant power shift from the hands of debt and shareholders to creditors and now a creditor with a default of Rs 1 lakh, can roll the company into liquidation. However, there are some grey areas as regards to foreign creditors.

The benefit of this enactment has been the time-restricted resolution process. Besides, the IBC regulations recently amended that promoters are now prohibited from bidding or getting engaged in the process of selling the assets and making the whole process transparent and reliable. It has fostered an immense hope of faster recovery, lesser defaults, and a stronger lending and investment sector in India.

Most of the businesses have outstanding debts in crores based on their business practices. They partially fail in reasoning how a creditor can file for bankruptcy if the company defaults payment to other creditors and not the creditor who is the applicant.

The law has now made it very clear that promoters and business holders can no longer work as per their rules. The authorities are trying to make a genuine attempt to reduce the time by curbing delays and preventing NPAs.

The development in creating the IBC has been a massive boon for the mergers and acquisitions of the companies while every debt-stricken company tries the restructuring of the debt or selling its distressed assets to the potential buyers.

The banks have been piling up on stressed assets of the companies, and the cases of IBC being filed with the National Company Law Tribunal (NCLT) are increasing day by day.

All in all, the IBC seems to be in its initial stage, backed by a persuasive composition and structure. The government is constantly restructuring the provisions of the code; furthermore, the Supreme Court (SC) has also amended it many times.

Recently, the Insolvency and Bankruptcy (ordinance) 2017 received the assent of the president on 1st October, 2018 but came with a retrospective effect from the date 23rd November, 2017 followed by the Insolvency and Bankruptcy (Second Amendment) Act, 2018 which state under section 29 A of the Code which enunciated that person who is an “Undischarge Insolvent” is ineligible to submit the resolution plan under the Code.

(Undischarged Insolvent means a person who cannot pay his due as when it arise even though he has committed any act of Insolvency or not.)

The purpose of the IBC is to develop a proper process for the resolution of insolvency. It is observed that this work is under progress, as the code is trying to overcome obstacles and is trying to tackle important issues.

Procedure to file a case for insolvency

A case for insolvency is filed before the adjudicating authority, i.e. in NCLT by financial or operation creditors or the corporate debtor themselves, who are claiming a stake in the company. The plea can be allowed or rejected in a maximum 14 days. In case, the petition is accepted, the tribunal appoints an Insolvency Resolution Professional (IRP) to draft a plan for resolution within 180 days (extendable by a maximum amount of 90 days). After that, the court initiates the Corporate Insolvency Resolution Process (CRIP). For that time, the Company Board of Directors are suspended, and promoters do not have a say in the management of the company.

If required by IRP, they can seek the support of the company’s management for day-to-day operations. Moreover, if the Insolvency Resolution Professional fails to revive the company, the process of liquidation is initiated.

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Banking in India

By: admin Banking 11 Apr 2019

Reserve Bank of India (RBI) states that India’s banking sector have been well-regulated and adequately capitalised.  Market, credit and liquidity risk studies propose that Indian banks are generally flexible and have withstood the global downturn well.
Recently the Indian banking industry has witnessed the roll-out new banking modules like small finance and payments banks. RBI’s current measures may go a long way in helping the restructuring of the domestic banking industry.
The Indian banking system consists of public sector banks, private sector banks, foreign banks, regional rural banks, urban cooperative banks, and rural cooperative banks, in addition to cooperative credit institutions.
Government Initiatives
Indian banks are continuously focusing on adopting an integrated approach to risk management. Banks have already embraced international banking supervision. 
Reserve Bank of India (RBI) has decided to set up the Public Credit Registry (PCR) an extensive database of credit information which is accessible to all stakeholders. 
Recently, the Indian banking industry has witnessed a historical decision of demonetization which has to lead to an excellent liquidity crunch. The impact of this liquidity shock on India’s GDP is still questionable and is under the evaluation of experts, but it is certain that all monetary transactions will come under the banking system which will lead to the next big step in the expansion of Indian Banking system.
The objectives of this research articles are to show the growth in the banking sector, technological development and computerisation in the Indian Banking sector. Technology enhances choices, create new markets and improves productivity and efficiency. Rising incomes are expected to increase the need for banking services in rural areas and therefore drive the growth of the sector. As of September 2018, Department of Financial Services (DFS), Ministry of Finance and National Informatics Centre (NIC) launched Jan Dhan Darshak as a part of financial inclusion initiative. It is a mobile app to help people locate financial services in India.
Demonetization has raised the deposit funds in the Indian Banks. It led the banks to keep a significant part of deposits in the form of cash deposits.  Sizes of deposits have gone up as the unaccounted money in the way of Rs.500, and Rs.1000 were flowing to the Banks. Post demonetization, several banks lowered their domestic term deposit rates and lending rates. Surplus liquidity conditions have helped facilitate the transmission of monetary policy to market interest rates.
Demonetization has pushed the public to digital banking. A cashless economy is one in the flow of cash within an economy is insubstantial, and all transactions have to be via electronic channels such as, credit, direct debit and debit cards, electronic clearing, payment systems such as Immediate Payment Service (IMPS), National Electronic Funds Transfer and Real Time Gross Settlement in India. Demonetization has led to an increase in the use of plastic cards, line Banking, an opening of new accounts, the number of customers in the branches and the use of ATM.
Note: To learn more about the laws and procedures involved, you can contact us at 'Legatoapp' where we help you in connecting with experienced lawyers who can assist you with the documentation and procedural aspects.
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