What about losses occurring due to human errors like wrong orders placed by dealers? If human errors can be refunded why not technical? I am paranoid about this.
Firstly it is tough to determine what is a technical issue and who is responsible for this. So if you pass the buck to the brokerage, he might pass it onto the leased line guys,and so on.. Also what happens when there is a profit made because of any such technical issue?
The rule says that brokerages have to cover (not just in India, but any exchange around the world) if he has made any gain out of the error. So yeah the only thing a brokerage is liable to pay back in case of an error human or technical is if the brokerage made any gain out of it (basically the brokerage).
We at Zerodha, if there is a human error which is completely because of our dealer do reimburse as a goodwill, but we don't have to do it by law. Traders have to account for this risk while trading/investing in the markets. Technical risk at the brokerage, your internet, exchanges, wherever. You can look at so many incidents at the exchange level also which was never compensated.