The central bank of India, Reserve Bank of India (RBI), has released draft guidelines for a new compensation scheme to protect people from digital banking fraud.
Under this proposal, customers who lose money due to fraudulent online banking transactions may receive compensation from their bank.
The goal is to provide quick relief to victims and strengthen trust in digital banking systems.
The proposed rules will apply to electronic banking transactions made on or after July 1, 2026.
How Much Compensation Customers Can Get
According to the draft guidelines, customers who suffer a loss of up to Rs 50,000 due to a fraudulent electronic banking transaction may receive compensation.
The bank will compensate 85 percent of the net loss or Rs 25,000, whichever is lower.
However, this benefit can be claimed only once in a person’s lifetime.
In the case of a joint account, any one of the account holders can apply for compensation.
But if someone claims compensation as a joint account holder, they will not be able to claim it again later as an individual account holder.
How to Report Digital Banking Fraud
To receive compensation, the victim must report the fraud quickly.
The incident must be reported on the **National Cyber Crime Reporting Portal or through the National Cyber Crime Helpline (1930).
At the same time, the customer must also inform their bank.
This reporting must be done within five calendar days of the fraud.
Timely reporting is necessary for the compensation claim to be considered.
When Will the Bank Pay the Compensation?
Once the bank receives the customer’s application, it must pay the compensation within five calendar days.
Later, the bank will seek reimbursement of the paid amount from the RBI on a quarterly basis.
If some of the stolen money is recovered later, the bank will recalculate the actual loss.
If the customer was paid more compensation than needed, the excess amount will be adjusted from the recovered money.
Bank’s Responsibility and Monitoring
Banks will also be required to set up a proper system to monitor fraud complaints.
The bank’s board or its committee must regularly review cases of fraudulent electronic transactions, check how complaints are handled, and ensure the compensation system works properly.
If customers report fraud after five days in cases involving third-party breaches, compensation may still be provided in eligible situations.
However, if the case does not meet the conditions, the customer’s liability will be decided according to the bank’s policy.
Importantly, if any unauthorised transaction happens after the fraud has already been reported, the bank will bear the entire loss.
Draft Guidelines Open for Public Feedback
The proposed compensation system will initially remain in effect for one year after implementation.
After that, the RBI will review its performance and may revise the rules.
The central bank has also invited public feedback on these draft guidelines.
Interested stakeholders can submit their suggestions to the RBI until April 6.
