RBI Rule: To get back the money withdrawn from your account, do this important work within 5 days..

In the era of increasing digital transactions, there's significant relief for customers who fall victim to cyber fraud. The Reserve Bank of India (RBI) has released a draft amendment to the rules governing customer liability in digital transactions. The primary objective of these new rules is to provide comprehensive protection to customers and provide compensation for small-value fraud.

The RBI has sought public comments on this draft until April 6, 2026. If all goes according to plan, these new rules will come into effect on July 1, 2026.

Banks will bear the burden of responsibility.

Under the proposed rules, the RBI has expanded the definition of "authorized electronic banking transactions." This will now include payments made under coercion or fraud. The most significant change is that the responsibility for gathering evidence in cases of digital fraud will now rest with the bank. The bank will have to prove that the customer was at fault, not the system.

Customers have zero liability in these situations.

Bank negligence: If the fraud occurs due to any negligence or carelessness on the part of the bank.
Third-party breach: If the fraud occurs due to a third-party lapse, and the customer reports it to the bank within 5 days.
Strict alert and reporting rules
To keep customers vigilant, the RBI has mandated that banks send immediate SMS alerts for all digital transactions exceeding ₹500. Additionally, banks must provide a 24/7 channel (such as a helpline or portal) for reporting digital fraud.

New compensation framework for small frauds

The RBI has, for the first time, proposed a fixed compensation for small-value digital frauds. Now, cases involving losses up to ₹50,000 will be eligible for compensation. The compensation amount will be 85% of the net loss or ₹25,000 (whichever is lower) for the victim.

This compensation will be available only once in a lifetime. For this, it will be mandatory to report the fraud to both the bank and the cybercrime portal within 5 days.

Compensation Math and Payment Timeline

A sharing of the compensation has been established between the RBI and banks. For losses less than ₹29,412, the RBI will bear 65% of the compensation, while the customer's bank and the beneficiary bank will share 10% each. For losses between ₹29,412 and ₹50,000, the maximum compensation is ₹25,000. The RBI will pay ₹19,118, and the respective banks will contribute ₹2,941 each.

Banks must pay the compensation to the customer within 5 days of the application. Banks will subsequently be able to seek reimbursement of their share from the RBI every quarter.

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