Reserve Bank of India (RBI) through its Master Circular dated 1.12.2015 (available on its website www.rbi.org.in) has issued consolidated instructions/guidelines on credit card, debit cards/pre-paid card operations of banks. The said instructions contain detailed terms under which a debit card may be issued, inter-alia, advising banks as under:

• The terms shall put the cardholder under an obligation to take all appropriate steps to keep safe the card and the means (such as PIN or code) which enable it to be used.
• The terms shall put the cardholder under an obligation not to record the PIN or code, in any form that would be intelligible or otherwise accessible to any third party if access is gained to such a record, either honestly or dishonestly.
• The terms shall specify that the bank shall be responsible for direct losses incurred by a cardholder due to a system malfunction directly within the bank’s control.  However, the bank shall not be held liable for any loss caused by a technical breakdown of the payment system if the breakdown of the system was recognizable for the cardholder by a message on the display of the device or otherwise known.  The responsibility of the bank for the non-execution or defective execution of the transaction is limited to the principal sum and the loss of interest subject to the provisions of the law governing the terms.

Further, with a view to reducing the instances of misuse of lost/stolen cards, banks may consider issuing cards with photographs of the cardholder or any other advances methods that may evolve from time to time. 

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha.

Cardholder security obligations require safeguarding card and PIN; bank liability limited for system malfunctions thereby. Consolidated instructions require cardholders to keep cards and access means such as PINs secure and prohibit recording PINs in any intelligible or accessible form. Banks are responsible for direct losses from system malfunctions within their control but are not liable for losses from technical breakdowns apparent to the cardholder. Bank liability for defective or non execution of transactions is limited to the principal and loss of interest, and banks may consider photo identification or other advanced methods to reduce misuse.