Reserve Bank of India announces new rules for digital fraud compensation

NEW DELHI — The Reserve Bank of India has announced new digital fraud compensation rules, taking effect January 1, 2027, that allow victims of small-value electronic banking scams to recover a substantial portion of their financial losses.

Under the upcoming regulatory framework, victims of fraudulent electronic banking transactions involving a gross loss of up to Rs 50,000 can claim compensation of up to 85% of their net loss, or Rs 25,000, whichever is lower. To qualify for this protection, customers must lodge a complaint regarding the fraudulent transaction within five calendar days.

The policy introduces a tiered liability structure designed to address rising concerns over digital fraud across India. Electronic banking transactions covered under the guidelines include automated teller machine transactions, point of sale transfers, direct fund deposits or withdrawals, and card payments or transfers initiated via telephone and the internet.

The 85% compensation amount will be calculated after deducting any recoveries made from the gross loss, regardless of whether those recoveries occur before or after the compensation is paid. Furthermore, the framework stipulates that compensation will remain payable for losses incurred on fraudulent transactions occurring up to one year from the implementation date, concluding on January 1, 2028.

In cases where fraudulent losses stem directly from a bank’s internal error, customers will bear zero liability. Under such circumstances, the compromised transaction will be fully reversed even if the customer fails to file a timely report.

To mitigate risks, the central bank mandates that financial institutions proactively guide their account holders on proper reporting protocols. According to the RBI, “Banks shall advise customers to report fraud EBTs toopold the bank and lodge a complaint through the National Cyber Crime Reporting Portal or National Cyber Crime Helpline (1930) at the earliest.”