RBI Introduces New Digital Payment Fraud Rules, Victims to Receive Compensation Under Revised Framework

The Reserve Bank of India (RBI) has introduced a new compensation framework aimed at providing greater financial protection to victims of digital payment fraud. The revised rules, notified on June 24, 2026, are scheduled to come into effect from January 1, 2027.

The new guidelines are designed to reduce the financial burden on customers who fall victim to unauthorized electronic banking transactions and digital payment scams. Under the revised framework, eligible customers may receive compensation for a significant portion of their financial loss, provided they report the incident within the prescribed time limit.

The move comes amid a sharp increase in digital payment fraud cases across the country, highlighting the need for stronger consumer safeguards in India's rapidly expanding digital payments ecosystem.

Digital Fraud Losses Cross ₹48,000 Crore

According to available data, digital payment fraud involving more than ₹48,000 crore was reported during the 2025–26 financial year.

A large number of these cases affected individuals from low- and middle-income households, making financial recovery especially difficult for victims. Recognizing this growing challenge, the RBI has revised its compensation rules to ensure that customers receive quicker and more structured financial relief after reporting eligible fraud cases.

The updated framework also places greater responsibility on banks to resolve complaints within specified timelines.

Compensation Available for Eligible Customers

Under the revised RBI guidelines, customers affected by eligible digital payment fraud can claim compensation for up to 85% of their net financial loss, subject to a maximum reimbursement of ₹25,000.

The benefit applies to electronic banking transaction (EBT) fraud cases where the total loss does not exceed ₹50,000.

The compensation amount will be whichever is lower:

• 85% of the customer's net financial loss, or

• ₹25,000.

The revised framework aims to provide meaningful financial support while encouraging customers to report fraud incidents without delay.

Fraud Must Be Reported Within Five Days

One of the most important conditions under the new rules is timely reporting.

Customers must report the digital payment fraud to their bank within five days of the incident to become eligible for compensation under the revised framework.

The RBI has also clarified that if a fraud occurs because of negligence or failure on the part of the bank, the concerned bank will be responsible for compensating the customer in accordance with the applicable regulations.

In addition, banks are required to send transaction alerts for all electronic transactions exceeding ₹500, enabling customers to identify unauthorized transactions as early as possible.

Banks Must Resolve Complaints Within Fixed Timelines

The RBI has instructed banks to strengthen their customer grievance systems by maintaining 24-hour complaint registration channels for reporting electronic banking fraud.

Once a complaint is received:

• Domestic fraud complaints must be resolved within 45 days.

• Cases involving international transactions must be resolved within 60 days.

These fixed timelines are intended to ensure faster resolution of customer complaints and reduce delays in compensation.

RBI and Banks Will Share Compensation Burden

For certain eligible fraud cases involving relatively smaller losses, the financial responsibility for compensation will be shared among different stakeholders.

Where applicable:

• The Reserve Bank of India will bear the largest portion of the compensation.

• The customer's bank will contribute a share of the payment.

• The receiving bank, where the fraudulently transferred funds were credited, will also bear part of the financial responsibility.

This cost-sharing model is expected to encourage stronger fraud prevention measures across the banking system.

Customer Awareness Remains Critical

Financial experts have welcomed the RBI's revised compensation framework, stating that it provides additional confidence to digital payment users.

However, they also emphasize that customer awareness will play a crucial role in the success of the new rules. Many victims of online fraud fail to report incidents promptly, reducing the chances of recovering lost funds and making it more difficult for authorities to track fraudulent transactions.

Experts recommend that customers immediately report suspicious transactions, preserve transaction records, avoid sharing confidential banking credentials, and use only official banking channels while filing complaints.

Stronger Consumer Protection for the Digital Payments Era

India's digital payments ecosystem has expanded rapidly in recent years, making consumer protection an increasingly important priority. The RBI's revised compensation rules represent another step toward improving trust in electronic banking services by ensuring that eligible victims of digital payment fraud receive timely financial support.

With the new framework becoming effective from January 1, 2027, customers are encouraged to familiarize themselves with the reporting timelines and compensation conditions so they can fully benefit from the protections offered under the revised regulations.