The Reserve Bank of India (RBI) has introduced new rules to provide greater protection to customers who lose money in online frauds and unauthorized digital transactions. The guidelines will come into effect on January 1, 2027, and will apply to electronic transactions carried out through commercial banks.The rules cover digital payment modes such as UPI, net banking, mobile banking, debit cards, and credit cards. However, they will not apply to transactions involving small finance banks, payment banks, regional rural banks, and local area banks.
- Full Refund in Case of Bank or Third-Party Failure
Customers will receive a full refund if the fraud occurs due to a bank’s security lapse, system failure, or failure to send transaction alerts. Similarly, if the fraud is caused by a third-party service such as a payment app, payment gateway, or telecom provider, customers will also be eligible for a full refund, provided they report the incident to the bank within five calendar days.
- Compensation Even If Customer Was Negligent
In a significant change, the RBI has also allowed limited compensation even when the customer is partly responsible for the fraud, such as by sharing an OTP or clicking on a phishing link.Under this provision, customers can receive up to ₹25,000 or 85% of the financial loss, whichever is lower. This benefit can be claimed only once in a lifetime.For example, if a customer loses ₹50,000 in an online fraud, 85% of the loss comes to ₹42,500. However, since the compensation is capped at ₹25,000, the customer will receive only ₹25,000.
- Report Fraud Within Five Days
To claim compensation, victims must report the fraud within five calendar days through the National Cyber Crime Reporting Portal, the 1930 cybercrime helpline, or directly to their bank. Banks are required to take immediate steps to block further unauthorized transactions.
- How Compensation Will Be Shared
According to the RBI framework,65% of the compensation will be borne by the RBI, 10% by the customer’s bank, and 10% by the beneficiary bank where the fraudulently transferred money was credited. Any amount recovered from the fraudsters will be adjusted before the final compensation is calculated.