Digital Banking
Digital Banking is the IIBF module that tests how Indian banks deliver and control banking through electronic channels-internet banking, mobile banking, cards, UPI, wallets, and agency channels-together with the RBI/NPCI rulebook and customer-protection duties. Questions often turn on which system is operated by whom, the limits and timings of payment rails, and who bears the loss when a transaction is unauthorised.
The Indian digital payment rails
- RBI operates NEFT (batch settlement, 24×7, no minimum) and RTGS (real-time gross settlement, minimum ₹2 lakh, 24×7 since December 2020). NPCI operates UPI, IMPS, NACH, RuPay, AePS and FASTag; UPI is an instant account-to-account overlay, not an RBI-run system.
- The Payment and Settlement Systems Act, 2007 gives RBI authority to authorise and regulate payment systems; the Digital Payment Security Controls directions (2021) require banks to adopt risk-based controls, tokenisation, and incident reporting.
- KYC Master Directions apply to PPIs and wallets; full-KYC PPIs can hold up to ₹2 lakh, while small PPIs are capped lower and cannot be cash-loaded beyond limits.
- RBI's 2017 unauthorised-transaction circular fixes customer liability: zero liability where the fault is a third-party breach and the customer reports within three working days; the bank must credit the amount within 10 working days.
Worked example
A customer notices a ₹50,000 UPI debit from an unknown device and reports it to the bank on day 2. Because the breach was third-party and the report was within three working days, liability is zero, not a "shared 50:50" loss. The bank must provisionally credit ₹50,000 within 10 working days and complete the investigation; if the customer had waited beyond seven working days, liability would follow the bank's board-approved policy.
Traps that cost marks
- Saying UPI is operated by RBI (it is NPCI); NEFT has no minimum while RTGS has a ₹2 lakh floor.
- Applying the zero-liability rule regardless of reporting delay-the three/seven-working-day tiers matter.
- Treating card tokenisation as optional after 30 September 2022: merchants may not store actual card data.