Victims of online fraud could receive compensation of up to ₹25,000; RBI is introducing a new rule—get the full details here..

Incidents of online fraud are constantly on the rise. People often fall victim to scams involving fake KYC updates, phishing links, fraudulent apps, or other online schemes, resulting in money being siphoned off from their bank accounts. In most such cases, victims are unable to recover the lost funds. Addressing this issue, the Reserve Bank of India (RBI) has introduced a new rule that could provide significant relief to victims of online fraud.

**Compensation of up to ₹25,000**
The RBI has issued a new framework under which victims of digital payment fraud can receive compensation of up to ₹25,000. However, this rule will come into effect on January 1, 2027, and compensation will be granted only after an investigation and subject to specific conditions. Let us understand this in detail:

**Who is eligible for compensation?**
According to the new RBI rule, any individual subjected to an unauthorized digital transaction can apply for compensation. However, there is a crucial condition: the customer must inform their bank about the fraud within five days of discovering it. If the complaint is filed within the stipulated timeframe and the case is verified upon investigation, the customer may be awarded compensation of up to ₹25,000. The final decision, however, will depend on the investigation and the conditions laid down by the RBI.

**Banks must also strengthen security**
Alongside the compensation rule, the RBI has directed banks to bolster their security systems. To this end, the central bank has issued draft guidelines regarding model risk management involving Artificial Intelligence (AI), machine learning, and automated systems.

Currently, banks use AI to monitor suspicious transactions and detect fraud. The RBI believes that improved AI systems will enable the timely prevention of online fraud.

**What to do in case of online fraud?**
If you fall victim to online fraud, do not delay. Immediately notify your bank and lodge a formal complaint regarding the incident. Remember, the sooner you lodge a complaint, the greater the chances of receiving compensation and getting your money back. In this context, this new RBI rule could prove to be a major relief for the crores of customers who engage in digital transactions.

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