RBI Proposes New Framework for Digital Fraud Compensation

The Reserve Bank of India has proposed a new framework aimed at providing compensation to customers affected by digital fraud. This initiative is designed to enhance customer trust and streamline the complaint resolution process. Key features include compensation for losses up to ₹50,000, a one-time benefit for individuals, and specific reporting conditions. The framework is set to take effect on July 1, 2026, and the RBI is seeking feedback from stakeholders until April 6, 2026. This move is significant in strengthening customer security as digital payments continue to rise.

By Narendra Chaudhary Mar 7, 2026, 15:37 IST

Overview of RBI's New Proposal

The Reserve Bank of India (RBI) has introduced a significant proposal aimed at providing relief to customers affected by digital fraud. The central bank has released a new draft framework titled 'Customer Liability in Digital Transactions,' which includes provisions for compensating victims of low-value digital fraud cases.

Key Highlights of the Framework

Fraud Limit: Customers who incur losses of up to ₹50,000 due to digital banking fraud (including UPI, internet banking, and card transactions) may receive compensation of 85% of the amount or a maximum of ₹25,000, whichever is lower.

One-Time Benefit: This compensation will be available to an individual only once in their lifetime.

Conditions:
- Fraud complaints must be reported to the bank and the National Cyber Crime Reporting Portal or helpline 1930 within 5 days.
- Compensation may still be granted even if the customer was somewhat negligent (e.g., sharing OTP), but timely reporting is essential.

Funding for Compensation: The RBI will cover 65% of the compensation, banks will contribute 20%, and the remainder will be managed through other arrangements. This initiative will be reviewed after an initial period of one year.

Effective Date: The new regulations are set to take effect on July 1, 2026.

RBI's Rationale

According to the RBI, approximately 65% of banking fraud cases in the country involve amounts less than ₹50,000. The objective of this draft is to enhance customer trust and expedite the resolution of complaints.

Feedback Period

As this is a draft, the RBI has invited stakeholders to submit their suggestions and comments by April 6, 2026. Detailed information can be found on the official RBI website, where feedback can also be submitted.

This initiative is a crucial step towards strengthening customer security amid the rising use of digital payments. If you have experienced a similar issue, it is important to report it promptly!