RBI New Rules: With the rise of digital payments, cases of online fraud are also increasing rapidly. In this context, the Reserve Bank of India (RBI) has proposed new rules to provide relief to bank customers. According to the proposal, if a customer suffers a loss of up to ₹50,000 due to digital banking fraud,
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RBI New Rules: With the rise of digital payments, cases of online fraud are also increasing rapidly. In this context, the Reserve Bank of India (RBI) has proposed new rules to provide relief to bank customers. According to the proposal, if a customer suffers a loss of up to ₹50,000 due to digital banking fraud, they may receive partial compensation. The RBI has also clarified in which cases the bank will be held responsible, when the customer will be considered at fault, and how to file a complaint in case of fraud. If implemented, these rules could come into effect from July 1, 2026.
Which Transactions Will the Rules Apply?
According to the RBI proposal, these rules will apply to all digital transactions made through UPI, internet banking, mobile banking, debit cards, credit cards, or ATMs. This means customers can be protected if an unauthorized transaction occurs through these channels. However, these rules will currently apply to commercial banks. Small finance banks, payment banks, and regional rural banks will not be covered.
How much compensation will be available in case of fraud?
If a customer is subjected to digital fraud and the loss is up to ₹50,000, they can receive compensation. According to the proposal, a customer can be paid up to 85% of the total loss, or a maximum of ₹25,000. However, this facility will be available only once in a lifetime. It is essential that the customer reports the fraud in a timely manner.
Which transactions will be considered authorized?
According to the RBI, if the customer makes the payment by entering the OTP, PIN, password, or card details themselves, it will be considered an authorized transaction. However, if someone fraudulently obtains customer information or deceives someone into transferring money, such cases may be considered fraudulent transactions.
Bank’s Fault and Customer’s Fault
The draft rules also specify when the responsibility lies with the bank and when with the customer. If the bank’s security system is weak, transaction alerts are not sent, or a proper fraud complaint is not available, this could be considered negligence on the part of the bank.
However, if the customer shares OTP, password, or card details with someone, ignores a bank warning, or downloads a suspicious app, this could be considered negligence on the part of the customer.
A third-party fault may also be the cause.
In some cases, the problem may not be the bank’s or customer’s fault, but rather a third-party fault. For example, a technical issue with a payment gateway, third-party app, telecom company, or payment aggregator could lead to fraud. Such cases would be considered a third-party breach.
Immediately report fraud
The RBI has advised customers to immediately report any suspicious transaction to the bank. Also, file a complaint on the National Cyber Crime Portal or call the 1930 helpline number. To receive compensation, the customer must file a complaint with both the bank and the cyber crime portal within five days.
Special System for Small Fraud Cases
In cases of small digital fraud, a major portion of the compensation may be provided by the RBI, while a portion will also come from the customer’s bank and the bank that received the money. If the stolen money is later recovered, the compensation amount will be adjusted accordingly.
