RBI's new guidelines for digital banking fraud: What's new?
What's the story
The Reserve Bank of India (RBI) has proposed a new set of guidelines to protect customers from digital banking fraud. The draft amendment, part of the 'Review of Framework of Limiting Customer Liability in Digital Transactions,' states that customers will have zero liability if fraudulent transactions are caused by bank negligence. This means banks would have to reverse unauthorized transactions linked to their lapses.
Expanded coverage
Guidelines to cover all electronic banking transactions
The proposed guidelines will apply to all electronic banking transactions conducted on or after July 1, 2026. The RBI has widened the definition of authorized electronic banking transactions to include payments made under fraud, coercion, or scam. This includes both card-present and card-not-present payments. The draft also introduces a new category called "fraudulent electronic banking transaction," putting the onus on banks to prove customer liability in digital fraud complaints.
Compensation framework
Customers reporting within 5 days will be compensated
For third-party breaches, customers reporting within five days will be fully compensated by lenders. A "bona fide victim" may get 85% of the net loss or ₹25,000, whichever is lower as one-time compensation during their lifetime. However, this is only if the loss is proven bona fide and reported to National Cyber Crime Reporting Portal or helpline (1930) and bank within five days.
Liability distribution
How will losses be shared?
For losses under ₹29,412 where 85% compensation is paid, RBI will bear 65%, customer's bank and beneficiary bank will share 10% each. For losses between ₹29,412 and ₹50,000 capped at ₹25,000, RBI will contribute ₹19,118 while each bank contributes ₹2,941. Banks must pay compensation within five days of application and can seek reimbursement from RBI quarterly.