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RBI Proposes New Rules: Get Up to Rs 25,000 Back for Digital Frauds

The Reserve Bank of India has issued a draft framework to limit customer liability in digital transaction frauds. The proposal includes compensating victims with up to 85% of the loss or Rs 25,000, whichever is lower, for frauds up to Rs 50,000 if reported promptly. This revision aims to broaden the scope of existing rules, speed up bank complaint resolution, and introduce a compensation mechanism for small-value frauds. The framework will be in force for one year from its effective date and is open for stakeholder feedback until April 6, 2026.

Key Points: RBI Draft Framework for Digital Fraud Compensation

  • Compensate frauds up to Rs 50,000
  • 85% of loss or Rs 25,000 cap
  • Reduce bank complaint processing time
  • Framework to be reviewed after one year
2 min read

RBI issues draft review framework to safeguard fraudulent digital transactions

RBI proposes new rules to compensate victims of small-value digital payment frauds up to Rs 25,000. Learn about the draft framework and liability limits.

"This will be reviewed... with an objective of enhancing the share of the banks and reducing / eliminating the share of RBI in the compensation paid to the victims - RBI"

New Delhi, March 7

Reserve Bank of India has issued draft Amendment Directions for 'Review of Framework of Limiting Customer Liability in Digital Transactions'.

Under the proposed framework, customers could receive up to 85 per cent of the loss or Rs 25,000 (whichever is lower) for frauds up to Rs 50,000 if reported promptly.

The proposed revision is aimed at enhancing the scope of existing instructions on limiting liability of customers in unauthorised electronic banking transactions to cover other categories of fraudulent electronic banking transactions, reduce the time taken by banks to process complaints related to fraudulent electronic banking transactions, and introduce a compensation mechanism for small value fraudulent electronic banking transactions.

The digital payment and banking landscape has evolved considerably since the issuance of the existing instructions on limiting liability of customers in unauthorized electronic banking transactions in 2017.

Upon review, it has been decided to issue revised instructions to banks.

The compensation mechanism proposed to be introduced under these Amendment Directions will be in force for one year from the effective date of these Directions.

"This will be reviewed on the basis of the experience gained with an objective of enhancing the share of the banks and reducing / eliminating the share of RBI in the compensation paid to the victims," RBI said.

The comments or feedback on the draft Amendment Directions may be submitted by the regulated entities and members of the public or other stakeholders on or before April 6, 2026, via email and the RBI website.

In the latest monetary policy meeting in early February, Reserve Bank of India Governor Sanjay Malhotra announced a set of measures aimed at enhancing customer protection, advancing financial inclusion, enhance flow of credit, strengthening urban cooperative banks (UCBs), promoting ease of doing business for NBFCs, and deepening financial markets.

Among others, it was proposed to introduce a framework to compensate customers up to Rs 25,000 for losses incurred in small-value fraudulent transactions.

In the monetary policy statement, the governor had announced that the RBI will also publish a discussion paper on potential measures to enhance the security of digital payments.

- ANI

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Reader Comments

R
Rohit P
Good initiative, but the devil is in the details. "If reported promptly" – what does that mean exactly? Banks often drag their feet and ask for endless paperwork. The real test will be how easy they make the claim process for the common man.
A
Aditya G
Finally! A concrete move towards customer protection. The 85% or ₹25k limit for frauds under ₹50k is a sensible start. It puts some onus on the banks to improve their security systems too, not just blame the user. Digital India needs this trust.
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Sarah B
As someone who works in fintech, this framework is crucial for the ecosystem's growth. It standardizes liability and forces banks to have better fraud detection. The one-year review period shows RBI is being pragmatic. Hope they also focus on consumer education about phishing scams.
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Karthik V
While I appreciate the intent, ₹25,000 may not be enough for many small business owners or freelancers who use UPI for larger transactions. The limit should be reviewed and potentially increased based on the average transaction values, which have gone up significantly since 2017.
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Meera T
This is a relief. Last year, my friend lost ₹15,000 in a UPI scam and the bank did nothing, saying it was an "authorized" transaction because she entered the PIN. At least now there is a formal mechanism. Public should give feedback before April 2026 to make it stronger.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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