RBI floats draft rules to compensate victims of digital frauds
09 Mar 2026, 12:52 PMCustomers who lose up to Rs 50,000 in fraudulent transactions could be eligible to receive up to Rs 25,000, or 85% of the net loss, whichever is lower.
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The Reserve Bank of India (RBI) has issued new draft guidelines for customer protection in electronic banking transactions amid rising cases of online frauds.
Among the proposed changes is the introduction of a compensation mechanism for small-value digital frauds.
Customers who lose up to Rs 50,000 in fraudulent transactions could be eligible to receive up to Rs 25,000, or 85% of the net loss, whichever is lower, once during his/her lifetime, as per the proposed draft guidelines that are part of the Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Third Amendment Directions, 2026.
However, for the customers to avail of the compensation, the loss has to be proven to be genuine in accordance with the internal procedures outlined in the bank's policy.
The fraud must also be reported within five days to both the bank and the National Cyber Crime Reporting Portal or Cyber Crime Helpline (1930).
The guidelines further said that for complaints involving fraudulent electronic banking transactions with losses of less than Rs 29,412, where compensation of 85% is paid, the RBI will bear 65% of the amount, the customer’s bank 10%, and the beneficiary bank the remaining 10%.
It added that tor complaints involving fraudulent electronic banking transactions with losses of Rs 29,412 or more but up to Rs 50,000, where compensation of Rs 25,000 is paid, the Reserve Bank will contribute Rs 19,118, while the customer’s bank and the beneficiary bank will each contribute Rs 2,941.
The guidelines also noted that customer will have zero liability and be entitled to a full reversal if a fraudulent electronic banking transaction occurs due to negligence or deficiency on the part of the bank, regardless of whether it is reported by the customer.
The same protection applies in cases of third-party breaches if the customer reports the unauthorised transaction to the bank within five calendar days of its occurrence, it added.
The guidelines said that banks must send alerts and improve security including mandatorily sending instant SMS alerts to the customers for all electronic banking transactions of value more than Rs 500.
The new guidelines, once finalised, will be applicable from July 1 this year.
The guidelines come amid rising instances of online frauds. According to data shared with Parliament, digital frauds worth Rs 4,245 crore were reported in the first ten months of FY25 across nearly 24 lakh incidents. The figure marks a sharp rise from Rs 2,537 crore recorded in the whole of FY23, underscoring the growing vulnerability of users as digital payments spread across the country.
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