RBI Issues Draft Digital Fraud Compensation Guidelines

• Manish Kumar
• 09 Mar 2026
• 107 Views

On 6 March 2026, the Reserve Bank of India released draft guidelines for a compensation scheme. This scheme intends to protect the bank customers in India from digital frauds. Under the scheme, a coverage of up to 85% of the lost amount or a maximum of 25,000 rupees shall be offered to the eligible customers. These guidelines come in response to an increase in fraud cases as the use of digital payments becomes more widespread throughout India. 

The proposed guidelines form part of the Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Third Amendment Directions, 2026. These guidelines, upon finalization, shall become applicable to electronic banking transactions conducted by customers starting 1 July 2026.

Draft Digital Fraud Compensation Guidelines: Features

Here are some features of the draft guidelines issued by the RBI for digital fraud compensation:-

• According to the draft rules, an individual will receive 85% of the net loss amount (calculated after deducting recoveries made from the gross loss amount, whether before or after paying the compensation) or 25,000, whichever is less, once during their lifetime if they file a complaint alleging a gross loss of up to Rs 50,000 due to fraudulent electronic banking transactions covered by paragraphs 76M and 76N. However, they must fulfill the following conditions for this:-

• The fraud must be reported to the bank as well as the National Cyber Crime Reporting Portal or Cyber Crime Helpline (1930) within five days, and

• The loss must be validated in compliance with the internal procedures specified in the bank's policy.

• 65% of the losses shall be covered by the Central Bank. An additional 20% shall be covered by the banks. 

• Initially, the guidelines shall remain valid for one year. After this, the contribution structure shall be reviewed.

• The compensation for digital fraud can only be availed once in the customer’s lifetime. 

• Once the draft guidelines are finalized, they will come into effect from 1 July 2026 onwards.

Cases in Which There is Zero Liability for Customers

In cases where the fraudulent electronic banking transaction happens due to bank’s negligence/deficiency (irrespective of whether the transaction is reported by the customer or not), the customer will be entitled to zero liability and reversal of transaction. 

The customer will also have zero liability and transaction reversal in case of third-party breach where the customer reports the unauthorized fraudulent digital banking transaction to the bank within five calendar days from the date of occurrence of such a transaction. 

Actions Treated as Customer Negligence

Certain actions will be considered as customer negligence in digital banking transactions like:

• Providing banking credentials like password, OTP, PIN and other details to another person to carry out transactions deliberately or otherwise.

• Not using credentials with reasonable care, such as writing down and storing the PIN with an ATM or credit card.

• Downloading malicious apps that compromise the security of the bank details.

• Failing to notify the bank instantly after learning about a fraudulent digital banking transaction or the loss of a payment instrument.

• Ignoring the bank's specific, directed and clear warnings that a potential transaction is probably a scam.

Sources: The Economic Times and Reuters