Digital payments and credit cards have made life easier, but online fraud cases are also rising. To protect customers, the Reserve Bank of India (RBI) has introduced a new rule that will give faster relief to victims of credit card fraud.
Under the new rule, if you report a fraudulent credit card transaction to your bank, the bank must provide a provisional credit (also called a shadow reversal) within five days.
This ensures you are not forced to pay the disputed amount while the investigation is ongoing. The new rules will come into effect from January 1, 2027.
Banks Must Give Relief Within 5 Days
According to the RBI, once a customer reports a fraudulent electronic credit card transaction, the bank has to reverse the disputed amount temporarily within five days.
This means the disputed amount will not increase your outstanding credit card bill, and no extra interest will be charged until the investigation is completed.
This gives customers immediate financial relief instead of making them wait for the final decision.
When Will Customers Get Zero Liability?
The RBI has made it clear that customers will not have to bear any loss if the fraud happened because of the bank’s negligence or a system failure. In such cases, the full amount will be refunded, even if the complaint is filed later.
If the fraud is caused by a third party, customers will still get zero liability if they inform the bank within five days of the transaction.
However, if the complaint is made after five days, the customer’s liability will be decided according to the bank’s policy.
SMS Alerts for Major Transactions
To improve customer safety, banks will now have to send instant SMS alerts for every electronic banking transaction above ₹500.
For transactions of ₹500 or less, banks can follow their own alert policy, but they cannot charge customers any fee for these notifications.
RBI has also directed banks to strengthen their security systems and take quick action whenever fraud is reported.
Compensation Even for Small Fraud Cases
The RBI has also announced relief for customers who lose money in small-value digital fraud cases.
If a genuine customer suffers a fraud loss of up to ₹50,000, they can receive compensation equal to 85% of the loss, subject to a maximum of ₹25,000. This benefit can be claimed only once during the customer’s lifetime.
