How I Raised My Credit Score By 250 Points

I had already unfolded the climax in my previous blog, on how I was being denied higher education due to my own credit mistakes. This blog is essentially the return of the hero who fights with bad credit and lives happily after with a great credit score.

850. That was the number printed on my latest CRIF Credit Report. Read ahead to know – How I Raised My Credit Score By 250 Points.

Credit Score = Trust?

One of the premises of a civilization or society is its need for safety. It is because of this need for safety from the wild did the early human start forming communities. Humanity has evolved and advanced a lot from them, but the basic need for safety is perennial. It is very important to have those few trustable companions or entities who make us feel safe.

Since the age of the Kings and the Landlords, the practice of lending also pivoted around the similar element of trust. Lending has transformed from being a local, personal referral based activity now into a very large industry backed by digital systems and a sense of trust emanating from the use of data sciences. The industry allows instant lending and peers to digital peer-to-peer lending on basis of data-backed trust that the person taking the credit will pay back after the pre-defined time. This data-backed trust comes from the “credit scores” provided by the Credit Bureaus by understanding behavioral patterns from the millions of records of individuals such as you and me.

I realized that I had to improve my credit score from 500 so that a bank can begin trusting upon me to repay its money. In my quest to improve, I began analyzing my credit report against the five major factors that form the basis for a credit score. And voila, I had devised a clear plan of action to seize control of my credit situation-

  • Payment History : my credit report clearly reflected my negligence around making payments towards my credit card dues. I would generally pay up money only after many follow-ups from the credit card companies, perhaps this was one of the most important factors barring me to pursue my dreams. I immediately cleared pending dues on all of my credit cards and vowed to now pay full dues at least 3 days prior to the due date.
  • Age of Credit : I had 4 credit cards. Since now I have to pay on all cards in time, I decided to close 3 of these cards. I decided to maintain the oldest credit card I had, as the higher age of credit means a better credit score.
  • Credit Utilization : The average spend on each of these 4 cards was nearly 80% of the assigned credit limit. This meant that the credit utilization ratio was 80%, which ideally should be 30-40%. The credit card I chose to retain was linked to my salary account. My banker helped me get the credit limit of this card increased. This enabled me to enjoy higher credit just with one card, but have a low utilization. I crossed my heart to not use above 25% of the allowed credit limit at any point.
  • Type of Credit : I pledged to explore a car loan (secured loan) and diversify from just having credit cards (unsecured loans). And the next year when I had a slightly better credit score, I took two additional loans, one for buying a car and the other for buying a laptop and paid them off in the same year. This allowed me to add different types of credit as well as provide better evidence of my credit behavior.
  • Number of Credit Inquiries : This did not seem to be a problem for me, however, I have since then avoided unnecessarily applying for credit cards or loans.

12 months of discipline had helped me improve my score from mid 500s to 670, it helped me get a car loan — but it wasn’t enough to help me fulfill my dream. After another six months of care, my credit score was above 750 and I was packing my bags to leave for an MBA. All I needed was a basic understanding of credit score and discipline to follow my plan. Last month I repaid my education loan but still continue to follow the rules I set for myself 5 years ago. As you read my story, let me tell my credit score as of today stands above 850.

Today, in parts of the world, your credit score can stand in your way of getting accepted as a tenant, employee or even spouse. Hence it is becoming paramount to manage your credit score to maintain your credibility not just for getting loans but for fulfilling your dreams.Don’t let your ignorance hamper your dreams.

Get Educated and Educate Others. Journey to happy credit starts here – CRIFHIGHMARK CREDIT REPORT

About the Author: Subhankar Mishra works as Service Delivery Manager at CRIF High Mark, India’s largest Credit Bureau database.

How often should I check my credit score? – What’s the myth? What’s the truth?

Credit Score is one of the most important factors of your financial credibility and often people are confused about various things related to it. ‘How to check score?’ ‘When to Check Score?’ ‘How many times should you check it in a year?’ are some of the most commonly asked questions. It is important to know your answers, know the truths and myths behind them.

Firstly, answering the most frequently asked question, ‘How often should I check my credit score?’ The answer is you can check it however often you wish to. It is a common myth that checking your own credit score frequently has a negative impact on your score. There is some negative impact on your credit score if you apply for new loan or card very often or with many banks at the same time, as the banks would make as many ‘credit inquiries’ with the credit bureau. With high number or frequent ‘credit inquiries’, the credit bureau believes that you are desperate to get a fresh loan, therefore, considers that behavior negative.

Having said this, it is not necessary to check your credit score all the time or every day. Let’s guide you through the ‘how’ and ‘when’ to help you determine the right time to check your credit score.

Who should check credit score?

A credit report is generated only when you own a credit card or have a loan taken in your name. Credit scores are calculated from the credit report. Therefore, whoever meets the above criteria is likely to have a credit score. All such people should certainly and regularly check their credit report and credit score.

What If You Never Had a Credit Card or Loan Before? When you have not borrowed in the past or have never had a Credit Card or a loan, there will be no updates about you with the credit bureau, who mark such cases as NH or ‘No History’. Due to a lack of details, the credit bureau will be unable to comment on your payment behavior. In such cases, we advise to start building your credit score and checking it once a year. For more details , you could visit our blog What do banks see when they look at your credit report?

When should you check your credit score?

When to check credit score completely depends on your comfort level and your credit activity. Checking your credit score once every quarter is perfect but people often check it twice a year or even monthly at times. The credit score should be checked and the credit report reviewed at least once in a year that’s a minimum!

It is important to remember that checking your credit score on your own does not impact the credit score at all, even if done very often. In fact, keeping a track of your credit score frequently makes sure that you are aware of your creditworthiness, you are taking informed decisions about your credit, and you have a clear picture about when and how to maintain your credit score. A quick reminder, avoid focusing too much on the day-to-day changes and try to identify the overall trend in your credit score. Below are some reasons why you might want to check your credit score or credit report:

1. Before applying for a new credit card or loan such as housing loan, auto loan to avoid any surprises
2. While building or improving your credit history to keep a track of your credit scores.
3. After settling off or closing a loan to know if the updates were made

When Not to Check Credit Score?

There is no such time when to avoid the credit score. The importance of credit score has been talked about in every other financial article. It has to be a part of your yearly routine at least to stay updated and informed.

Even when you have good credit score, it is important to keep an eye on any drops in score or inaccurate information on your credit report and to ensure that it is maintained above acceptable thresholds. If it is on the lower end, make sure you change your habits and take conscious steps to bring it up. Also, minor changes on your credit report or credit score should not be a cause of concern as these are expected to happen. So checking credit score daily can be avoided.

How to check your Credit Score?

There are various online websites which give you credit score, but the source of such credit scores would be one of the four RBI regulated credit bureaus such as CRIF. When it comes to finances, you ought to trust the expert and give importance to data security.

One of the trusted way to do so is check it from CRIF, a RBI regulated credit bureau. You are entitled to check a credit score and credit report FREE once in a calendar year from CRIF. Checking your credit score is easy three step process – fill your personal details, confirm your identity and download the report.

There is no right time or right day to start keeping a track on your financial credibility. Informed or Unaware, choose wisely

Educating Myself for My Education Loan

What if you wake up one day and no one trusts you? You can no longer buy the swankier car or that beautiful home you dreamt of. Have you ever had such thoughts? I have had, not very long ago. It was the monsoon of 2011 and India was witnessing some of the defining moments of the decade; Euphoria of India winning the Cricket World Cup, Mass mobilization against corruption inspired by Anna Hazare and Mumbai turning into a hot hunting ground for terror. Amidst all these, my heart was racing faster for my achievements of scoring 700+ in GMAT, grant of Scholarship from Wharton School and Said Oxford. I had landed in the kingdom of dreams. A dream of a joining a top 10 global MBA program bloomed.

Maroon 5 was right when they sang “Nothing lasts forever”. Before I could even climb the next ladder for my dreams, they were thrashed like the storyboard that had been tipped and jumbled, disjointing the order and twisting the timeline. Banks had refused to fund my remaining fees of 60 Lakhs for the education. I was being denied an opportunity because no one seemed to trust me.

Begging was the only form of request I hadn’t resorted to when I met Mr. Nelson, who rather than just rejecting my request, gave me a reason for not being able to help me. He told that my credit score was in the 500s, generally considered as a poor credit score, categorized as High-Risk Applicant by the Credit Bureau, and since it is one of the most important factors in the loan approval decision, no bank will consider giving me a loan with such a credit score.

I couldn’t rely on my heritage as both my parents are loan averse and had even discouraged me to apply for one. I realized that this new unknown “credit score” was standing between me and my dream. It was bizarre as I hadn’t heard of any such concept in the years of my preparation, not from any of my peers, not in any online forums, not in the coaching institutes, never. Having worked for top financial institutions and having traded in derivatives and share markets, I used to consider myself among the frontrunners in financial literacy. And, here I was not even aware of what a Credit Bureau was and what a Credit Score was, a part of the financial world which was about to change the course of my life.

On my way back home, I browsed through the internet to understand what a Credit Bureau was and why is the credit score so important. It was a sort of revelation to understand how critical credit scores are to lending and how most people like me aren’t even aware of it. I was of the view that I could find a way around this credit score and convince officials to grant me the loan, but then I knew, the only option left was to work on my credit score and park my dreams for the time being.

850. That was the number printed on my latest CRIF Credit Report. It’s an excellent credit score which is loved by every bank or lender I speak to. Today not only I am credit worthy, but I can ask for preferential interest rates on my loan. How did I get here? To unlock the trick or secret to an excellent credit score, read my next blog How I Raised My Credit Score By 250 Points.

About the Author: Subhankar Mishra works as Service Delivery Manager at CRIF High Mark, the only comprehensive Credit Bureau in India.

Banking Ombudsman

Did you ever fight with your elder brother during your childhood? Whom did you go for the resolution? Your mother, right. However, we are sure that many times, you would have reached out to your father against the resolution made by your mother. Our families implicitly carry their own mechanisms to address and resolve complaints or grievances.

Given the number and the variety of interactions we engage with banks today, some of us are likely to have complaints or grievances against the services offered by the banks. Though such hierarchy for resolving complaints and disputes comes naturally into our homes, Reserve Bank of India (RBI) has defined such hierarchy for redressal of customers grievances through Banking Ombudsman Scheme, 2006.

According to the said scheme, any person who has a pending complaint against his bank in terms of deficiency of services or in respect of loans taken or not following fair practices etc may file a complaint online with the Banking Ombudsman appointed by RBI to get the issue resolved. RBI has appointed about 20 senior officials as Banking Ombudsman, one in-charge for a one or more states, for assisting you with your complaints.

The guidelines require the complainant to first exhaust the grievance redressal avenues within the bank such as writing to bank’s customer service desk or to the bank’s nodal officer and then only approach the Banking Ombudsman. The complainant may approach Banking Ombudsman in case he has not received any reply within a period of one month of the complaint or the complainant is not satisfied with the reply given by the bank.

While the Banking Ombudsman Scheme 2006 covered almost all types of banks operating in India, the RBI recently announced an Ombudsman setup for NBFCs for helping consumers with complaints against any service deficiencies of large NBFCs.

How about complaints on your credit report?
You may notice an error in your credit report which may be affecting your credit score as well, and thus your ability to take a loan for your needs. Since CRIF deals with a large amount of data emanating from many banks and other financial institutions and further, in respect of many borrowers, an inadvertent mistake in your credit report cannot be ruled out completely. Read more to understand how credit bureaus work.

Whenever you face such a situation, you may write to us highlighting the discrepancy along with the unique Report ID on the right top corner of your CRIF Credit Report. If you wish to enclose supporting documents, you can write to crifcare@crifhighmark.com. Our customer team ensures that your concerns are heard promptly. Technical issues, if any, are addressed at the earliest and a revised credit report is thereafter issued at no extra cost to you.

In case the issue is with the data provided by the bank to CRIF, we forward the issue to the concerned bank requesting a correction. At the same time, CRIF also requests you to directly take it up with the concerned bank to help expedite the correction. CRIF continues to follow-up with the concerned bank to support you with this correction. As soon as CRIF receives a confirmation for correction, we update our records and share a revised CRIF Credit Report with you.

Even though CRIF strives to offer best standards of customer service, in case you are not satisfied with the response from our customer service desk, you can escalate the matter to CRIF Nodal officer by writing to nodalofficer@crifhighmark.com.

If you do not hear from CRIF or the bank within a reasonable time of 30 working days, you can also approach the Banking Ombudsman for the said discrepancy.

Always at your service! Read FAQs on Banking Ombudsman

What benefits from Banks can I expect if I have a good score?

Rakesh has been making routine visits to his bank for getting his home loan sanctioned. As this was his first loan, he had been curious about the concept of credit score. Counting upon his neighbor, Aditya for all his financial queries, he had even discussed the things banks notice in the credit score with him a couple of days back. You can check the conversation here. So, while they were watching the FIFA World Cup match live on TV, the discussion during the halftime again turned towards the credit score.

“Aditya, do you remember we talked about credit score last week. I checked with my bank manager and came to know that my credit score is 759. Is this something good or bad?” Rakesh checked with Aditya.

“That’s indeed a great score. Any score above 700 is generally seen as a good score.” Aditya said. However, Rakesh was not much satisfied with this plain answer. It seemed like Rakesh had something more to ask.

Noticing this, Aditya continued, “A good credit score is an indicator of creditworthiness, i.e. the person has established positive habits with their finances. One tends to get plenty of benefits with a good credit score.”

Benefits of a Good Credit Score:

1. Better chance for credit card and loan approval- Credit score is your first impression of you as a borrower in the eyes of the bank. As such, having a good credit score improves your chances for faster and earlier approvals for credit cards and loans etc.

2. Low-interest rates on loans- Several banks have started linking the interest rates applicable to the borrower with credit score. As such, the interest rate you may be charged on your loan can get affected by your credit score. Some time back, Bank of Baroda had become one of the first banks to offer better interest rates on home loans for customers with a credit score above a specified number. Many more banks have already followed the suit and several others are now joining the race. Recently, IDBI Bank has also offered some discount on the applicable interest rates for customers with good credit score. It, therefore, becomes imperative for you to maintain a good credit score.

3. More negotiating power – Your better credit score helps your bank to perceive you as a less-risky borrower. As such, you can ask for concessions on processing fees, higher loan to value ratio (amount of loan against the value of the security) etc. and given your good credit score, such requests can be definitely expected to be considered favorably by the bank as well. Any saving is a good saving, nevertheless.

4. Get approved for higher limits – With a good credit score, you get reflected as a healthy borrower with lower credit risk for the bank. As such, you may also be approved for higher limits against your credit card/ loan etc. However, do make sure that you genuinely need such higher limits before choosing to avail them. After all, the money you are going to use is just a loan and you need to repay it one fine day.

5. Bragging rights – This is more linked to your psychological need. A good score highlights you as a responsible borrower who makes his payments against the debts on time. As such, you can rightfully brag about it within your friends network.

“Keeping all other things aside, let me focus on the last point mentioned by you.” Rakesh quipped.

“Definitely. I have always believed about appreciating good things in life, be it your credit score or a cup of tea. Masala tea or ginger tea?” Aditya was all into smiles as he offered Rakesh a cup of tea.

What do banks see when they look at your credit report?

Rakesh had applied for a housing loan with a leading housing finance company. However, when he read in the newspapers that XYZ Bank is offering relatively lower interest rate, it definitely appealed to him to approach XYZ Bank. Considering the high loan amount, even a 0.50% benefit in interest rate does make a huge difference in the overall outflow from one’s pocket. While the bank was doing its due diligence before sanctioning him the loan, Rakesh’s credit report was also fetched by the bank. Curious about what all would show up in the Credit Report, he visited Aditya, his neighbor and also a Chartered Accountant to look for answers.

“There’s more to a credit report than just how much of money you owe to banks. The credit report details out all of your credit information as has been gathered by the Credit Information Bureau (such as CRIF) from the banks, NBFCs and other types of lenders. Bankers keenly review various details in your credit report before approving the loan.” Aditya said and continued further.

Details Fetched by Bankers from the Credit Report:

1. Credit score: It is the first impression the banker can have of you as a borrower while going through your credit report. Reflecting your repayment tendencies, it indeed impacts your access to the credit. For an individual with a regular credit history, the credit score ranges from 300 to 900. For a bank, higher the credit score, lesser is the probability of customer defaulting on the loan. It, therefore, becomes imperative for you to have a better credit score i.e. above 700.

2. How much you owe and to whom – Your credit report includes information about each of your existing credit accounts, including credit cards, home loans, car loans, personal loans etc. This helps them since the existing liabilities on you and also the type of loans taken by you. Every loan will tend to reduce the repayment capacity of the borrower for a new loan. Bank will be able to understand your monthly outflows (sum of EMI amount and card payments) towards your loans.

3. Repayment habits – This is the primary parameter which impacts your credit score as well. Your credit report tells the potential lenders about your repayment tendencies. It shows up how much amounts are overdue presently, how much amounts had been overdue in the past and in case any one-time-settlement has been resorted to by the borrower in respect of the loans.

4. Are you a Loan Hungry Individual? – In case you applied for loans with many banks in a short period or applied for many loans or cards every couple of months, you’ll seem less appealing to potential lenders. A banker may conclude that you have a high dependency upon debts and therefore you may be desperate for loans.

5. Personal Details – Your credit report will also contain information of your addresses for your existing loans and credit cards. As such, the banker can have a fair idea about the stability of your residence i.e. how long you have been staying at your current place of residence etc.

“So in a nutshell, a credit report is the mirror of my credit profile and repayment habits. A bank is giving my incentive on interest rate if I have a good credit score the since they see me as the less risky customer.”
Rakesh tried summarizing his lesson.

“Spot on!” Aditya beamed hearing his disciple’s summarization. “You are the solution of all my financial worries. No wonder, I totally rely upon you.” Rakesh quipped.

RBI to set up Public Credit Registry (PCR) as Central Database for all Borrowers

Reserve Bank of India, in its Monetary Policy Review meeting held on 6th June 2018, has announced setting up a Public Credit Registry (PCR) in a phased manner. If you have just been wondering what PCR is all about or how does it impact you as a borrower, this article is the right place for you to know more about it.

Under the present loan, reporting structure set up by RBI, CRILC (Central Repository of Information on Large Credits) has been set up for loans with aggregate exposure (loan outstanding plus undisbursed sanctioned loan) of more than Rs.5 crores. Further, all the RBI regulated entities are also required to submit credit information (including loan sanctioned, current repayment status etc.) in respect of all the loans to Credit Information Companies (CICs) which can offer credit scoring and other data analytics on the basis of such data. CRIF High Mark is also one of the four CICs operating in the country.

What is Public Credit Registry (PCR)?
Public Credit Registry (PCR) is expected to be a National database centrally and directly managed by RBI or one of its subsidiaries covering all the loans and borrowings by an individual or corporate or any other legal entity. While RBI is yet to issue detailed modalities with respect to PCR, it can reasonably be expected to act as a single point of reporting of all the material events occurring in respect of each loan, irrespective of whether such an event is adverse (negative data) or a favorable one (positive data). A typical example in respect of a favorable event can be the proper closure of a housing loan taken for a 2 RKH house. Similarly, an adverse event can be delay or default in respect of the loan repayment.

Salient Features of PCR
Here are the salient features of Public Credit Registry as can be inferred from the High-Level Task Force Report, which recommended setting up of such PCR:

1. To cover all loans and borrowings – PCR will encapsulate all the types of loans and borrowings including corporate loans.

2. No minimum threshold on loan size – PCR intends to cover all the loans irrespective of any minimum threshold and thus, will reflect the entire indebtedness of the borrower at one single place.

3. Information in respect of borrowers in all legal forms – PCR will cover the borrowers in all legal forms, whether an individual consumer or an MSME or a corporate or any other kind of legal entity (MSMEs etc)

4. Interlinkage with external data sources – The scope of PCR is expected to act like a comprehensive database for the information of the borrower and will also include information with external data sources like MCA for company information, CERSAI for property information, GSTN for an idea on revenues etc. for a more complete view of the borrower.

Benefits of PCR
1. Single Window for Complete Information in respect of Borrower – Under the present setup, loan related information in respect of large borrowers is not available in a single window. For example, inter corporate borrowing, External Commercial Borrowings (ECBs), Foreign Currency Convertible Bonds (FCCBs), Masala Bonds (Bonds issued outside India but denominated in Rupees) etc. are not available in a single database in public domain. Banks and financial institutions will need to just search for the borrower to get all the related information there itself.

2. Reduction in Compliance Burden of Reporting Entities – The information in respect of loans gets reported to multiple agencies in multiple formats leading to inefficiency and duplication in reporting as well as increased reporting burden for the reporting entities. As and when PCR is implemented, it will result in single-window reporting system and thus help in reduction of compliance burden of banks and financial institutions reporting such information.

3. Prevention of Multiple pledging of Collaterals by Borrowers – In case of a loan to Deccan Chronicle Holdings Ltd. By Canara Bank, it came into notice that the borrower had raised funds from different banks against the same. Such instances can be eliminated if all the collateral related information is available to all the lenders/ prospective lenders in an unbiased manner. PCR will aim to fulfill that objective.

4. Complete data available for Supervision and Research – A central and complete database will provide a timely and holistic view to the RBI to carry out supervision on the banking sector, and also carry out periodic economic research to support policy-making.

Since the PCR will be an extensive database of all credit information belonging to the customers at one place, it a welcome step in improving the information access for the lenders. PCR may not include its Credit Scoring services under its ambit and may just act as the main repository of data.

3 musts for a SAFE digital banking experience

Technology has impacted every aspect of human life and banking is no stranger to this. Digital banking has taken the world by a storm and made it possible to avail banking services all through a simple click of the mouse. While digital banking is safe and convenient, there are a few aspects you need to look into to ensure a safe and secure experience. Awareness is the best defence, so here we go!

Do Not Share your Account and Card Information with anyone
It is always advisable to resist from sharing any of your account or card information with anyone, especially over calls, even if the person at the other end is posing to be a bank official. Further, to protect your online and digital banking experience, you should create strong passwords with a mix of alphabets, numbers, and special characters. Do remember that many fraudsters are just waiting for one mistake from your end. Since past few days, one SMS is moving across the mobile devices:
– Dear Customer, your XXXX Bank Debit Card points worth Rs. 6897 expired by XXXXXX. Kindly convert your points in cash by click here. We came across several instances where the receiver of the message clicked on the link and shared their card details on the link in the message. While no points got converted into cash as such points were non-existent, the card holder became a victim of fraudulent activity.

Protect your device
Digital banking is highly dependent on the use of physical devices such as smartphones, tablets, and laptops. In the unfortunate event that we lose any of these devices, all personally identifiable information (PII) about our bank accounts becomes prone to loss or theft. So always protect your devices through passwords, screen locks and the like. This will make it almost impossible for any other individual with access your device to read into private data, especially the financial one.

Ensure that KYC Documents submitted by you are Put to That Use Only
When you submit some documents to the bank officials as part of Know Your Customer (KYC) process, make sure that such documents are stored in the records only for that very purpose only. There have been instances of use of such documents for opening of fraudulent accounts in your name. Since the documents disclose your identity in the bank’s records, you may be held liable for any such fraudulent activity in that account. It is a general practice to hand over the PAN card and other identity/ address copy duly forsigned for applying a new credit card when executives visit our office with great card deals. Make sure you also put up the purpose of the document submission on the self-attested copy so that the document cannot be used another time.

These small yet significant practices form the cornerstone of secure digital banking, and should be followed diligently by one and all. We, at CRIF, deploy the best safety practices to deal with your sensitive data and make sure that any unauthorised access to such information is detected and eliminated at the first instance.

Unauthorised Electronic Banking Transaction- Loss To Consumer Or The Bank?

This year, the Financial Literacy Week by RBI focuses on “Consumer Rights” to educate consumers on their liability for unauthorised electronic banking transaction.

Can you imagine the possibilities of electronic banking transactions? Having the ability to receive or send money whenever and wherever. Buying things online in the quickest way. Or getting your bank related work done in minutes if not seconds. Well yes, it’s all that and more. Electronic banking has given consumers convenience like never before. Saving time and energy of physically getting things done are diminishing by each passing day. But with all that power, also comes a great deal of caution and responsibility.

Do you remember the times you have received a message saying- ‘Do not share your user ID and password with anyone’? Is it safe to say more than once? Definitely. So, what is a banking fraud and how is electronic transaction susceptible to such a cause quite easily sometimes? Let’s say that you got an email from your bank asking for your details for xyz type of update and you enter the site only to realise there is something odd. Or you put in your details on some random site without genuine or easily recognisable credentials? Or the very common act of responding to Spam messages that claim to send you 10 million dollars because someone is really ‘generous’? And most recently, where sites have actually been known to sell your data that you entered trusting that one and only social website?

Fraudulent acts of banking can come from anywhere and anytime. A known term for this is called ‘phishing’ where an organisation or an individual tries to illegally obtain your personal information to do just about anything. So, how do you deal with it? Earlier, a commonly known fact was bearing the loss. Why? Is it because you didn’t know whom to ask for help? What to tell the bank if they question you for sharing details to a third party website? Or you just didn’t get notification soon enough to realise the urgency of notifying an authority? Can be one and can be all.

With the day-by-day shift to digitisation, which acts as a boon to advancing technology meant to simplify processes as well as optimise security; it also brings a need to educate people on safe practices and awareness in case of being victimised by a fraudulent act. Considering the surge on consumer grievances relating to unauthorised transaction resulting in debits to their account / cards, the criteria for determining customer liability in these circumstances have also been reviewed. All said and done, you may now understand your power as a consumer, thanks to RBI’s law on safeguarding consumer rights and their money.

According to the law, RBI makes it clear that the consumer has no liability when an unauthorised transaction happens in case of a fraud or even contributory negligence and/or deficiency on part of the bank. But what if neither the consumer nor bank is at fault? The law says that the consumer will not bear the loss if he/she notifies the bank within 3 days of the fraudulent occurrence. In this case, the bank shall be liable to pay the consumer full amount within 10 days of time.

However, in cases where the fraud is due to consumer’s negligence by sharing payment credentials then the loss till the time he/she reports to the bank shall be borne by the consumer only. Now, here’s a catch! What if the consumer is not!at fault and the bank blames them for sharing their information with a third party that inherently led to an unauthorised transaction? The bank will play dumb to admit their leniency in the matter or even admitting a third-party breach. Fret not, the law by RBI as dated July 2017 clearly states, ‘the burden of proving customer liability in cases of unauthorised electronic banking transactions shall lie on the bank’.

In other words, the bank has to do all the hard part to prove their innocence in the matter and your complete fault. Sounds easy? It is not. The RBI further emphasizes the need for banks’ attention to not only send immediately and without fail, SMS and e-mail alerts, but also ensure that such messages are enabled to carry the customer’s reply too so that a consumer can report any such fraud immediately.

So, to sum it up- as consumers, know your rights and don’t ever share your personal and banking information with other people for your own security. Now that you know, share this blog and let’s unite with RBI to spread the importance of being financially-sound this Financial Literacy Week 2018.

Safe Digital Banking Experience- How We As Consumers Can Help

This year, the Financial Literacy Week by RBI focuses on "Consumer Rights" to educate consumers on their part to have a safe digital banking experience.

"Ignorance is bliss" is a common phrase that falls in the negative of banking or finance related books. Regardless of what we hear every day or read in every passing ad- we all fall short to follow the simplest of steps to ensure a safe online banking experience. An online banking fraud happens when a person (or in this case, a hacker) takes hold of your bank account details to do absolutely anything, from taking out cash to selling details to another party to posing threats to someone under your name.

As our financial transactions become more digital, banking and other financial institutions are making sure to secure their own network and their customer’s money in the best possible manner. But as an individual, it is important to follow few simple steps that ensure security provided by your bank is supported by your diligence and caution.

First and foremost, secure the basics-

Password- Keep it Gibberish, one that no one can predict. Use uppercase, lowercase, numbers, symbols and anything that you can think of!

Log in- Only through secure networks. Do not use the free Wi-Fi available at public places for your banking work. Keep all bank related work preferably at home with your private network or mobile data.

Monitor- Your debit and credit cards are vital mediums for potential hacking. Make sure you always keep an eye out on every transaction and SMS sent by the bank.

More of the above 3, the better- To safeguard your bank account, keep another level of security at every stage. Login with OTP sent to your mobile number, or use secret question to avoid potential hacking at that moment, and do monthly reviews of your bank statements.

Second, understand the enemy-

System attack- A commonly known term "malware" is software designed to infiltrate or damage a computer system without your knowledge. Examples of malware (malicious software) include computer viruses, trojan horses, spyware and adware. Don’t fall prey to such an attack by making sure you have updated anti-virus software that scans everything including emails, on your computer as well as on your mobile phones and tablets.

Email attack- Your bank will never ask you to provide personal information via any email or online communication. Similarly, nobody is ever so rich to just send you money from abroad by only getting your personal information. Do not pay heed to such activities or emails. Such kind of activity is called "phishing" where an individual or organisation tries to acquire your details for a fraudulent act.

Browser attack- Known as "domain spoofing", this cyber crime interferes during browsing activity, only to reroute you to a fraudulent site. Once there, you are asked to enter personal information, just as with "phishing".

Thirdly, now that you know the above two, be alert:

Do not share your card or account details- No matter how trusting you are towards the other person; you or the other person might still be unaware whether they’ve been a victim of online fraud. Banking is a personal activity which you should never let anyone else handle for you.

Turn off the Bluetooth- It’s very common to be hacked via your Bluetooth device in your mobile phone. Hackers, once getting access into your phone can create chaos in unimaginable places, including your bank account.

Log out properly- Thinking that by cancelling your browser window, all processes will be shut down is a myth. Always make sure you log out of your profile before exiting the window.

Update your systems- Whether it’s iOS, Android or Windows; your system will always prompt you when an update for operating system is needed- do not ignore it. Keeping your system updated ensures safety against potential threats that change their ways every day!

Online fraud is becoming common day-by-day but so is it’s antidote with various software and techniques. Having said that, at our end, we must ensure conscientious practise of safety measures for a fraud-free online banking experience.Now that you know what to do, spread this knowledge and let’s unite to help RBI attain financial literacy all across the nation this RBI Financial Literacy Week 2018.