The Reserve Bank of India (RBI) has released draft guidelines for a new compensation scheme aimed at protecting people from digital banking fraud.
Under the proposed rules, customers who lose money due to fraudulent online banking transactions may receive partial compensation.
The move comes as digital payments and online banking continue to grow rapidly in India.
If the fraud involves a loss of up to Rs 50,000, the victim may receive 85% of the net loss or Rs 25,000, whichever is lower.
However, this benefit will be available only once in a customer’s lifetime.
The new rules are expected to apply to electronic banking transactions made on or after July 1, 2026.
How Victims Can Claim Compensation
To receive compensation, customers must report the fraud quickly.
The RBI says the victim must report the incident on the **National Cyber Crime Reporting Portal or through the National Cyber Crime Helpline 1930.
In addition, the customer must inform their bank within five calendar days of the fraud.
In the case of a joint bank account, any one of the account holders can file the claim for compensation.
However, if someone claims compensation as a joint account holder, they will not be able to claim it again later as an individual account holder, and vice versa.
What Happens if the Stolen Money Is Recovered
Sometimes, banks or authorities may recover some of the stolen money after compensation has already been paid.
In such cases, the bank will recalculate the customer’s actual loss.
If the bank had earlier paid more compensation than required, it will adjust the excess amount from the recovered funds and return the remaining amount to the customer.
Responsibilities of Banks Under the New Rules
The RBI has also proposed several responsibilities for banks.
Banks will need to create a system to regularly report fraud complaints to their board or relevant committees.
The board will periodically review fraud cases, actions taken, and the effectiveness of the grievance redressal system.
Once a customer submits a valid application for compensation, the bank must pay the amount within five days. Later, the bank can seek reimbursement from the RBI on a quarterly basis.
What Happens If Fraud Is Reported Late
If a fraud caused by a third party is reported after five days, customers may still receive compensation in eligible cases.
If the case does not qualify under the scheme, the customer’s liability will be determined according to the bank’s internal policy.
The RBI has also clarified that any loss from unauthorized transactions occurring after the customer reports the fraud will be fully borne by the bank.
Public Feedback Invited on the Draft
The proposed compensation system will initially remain in force for one year after the guidelines take effect.
During this time, the RBI will study how the system works and may revise the rules later.
The central bank plans to review the scheme with the aim of increasing the responsibility of banks and reducing or removing RBI’s share in compensation in the future.
The RBI has invited public feedback on these draft guidelines until April 6.
