The Reserve Bank of India on Friday released draft guidelines for a compensation scheme aimed at protecting individuals from digital frauds. According to the guidelines, individuals who have lodged a complaint involving a gross loss of up to Rs 50,000 on account of a fraudulent electronic banking transaction would be compensated 85% of the net loss amount, or Rs 25,000, whichever is less, once during their lifetime.
The guidelines will be applicable for cases of electronic banking transactions undertaken by customers on or after July 1, 2026.
The RBI has specified that the victim will have to report the fraud on the National Cyber Crime Reporting Portal or National Cyber Crime Helpline (1930) and to the bank within five calendar days from its occurrence. In the case of joint accounts, any one of the account holders may submit the claim for compensation.
“The customer availing (of) compensation as a joint account holder shall not be eligible for claiming compensation in his/her capacity as a single account holder in future and vice versa,” the draft said.
If any money is recovered after the bank has already paid compensation for a fraudulent electronic transaction, it will recalculate the amount based on the customer’s actual loss. If excess compensation was paid earlier, the bank will adjust it from the recovered amount and pay the balance to the customer.
For banks, the RBI has proposed to put in place a suitable mechanism and structure for periodic reporting of complaints to the board or one of its committees.
The bank will have to compensate the customer within five calendar days of receipt of the application, and would seek reimbursement of the applicable amount from the RBI on a quarterly basis.
The bank’s board or its committee will have to periodically review the fraudulent electronic banking transactions reported by customers, the action taken thereon, functioning of the grievance redressal and compensation mechanism, and take appropriate measures to improve the systems and procedures.
In cases of third-party breach reported to the bank after five calendar days, the customer shall be compensated in eligible cases. If the third-party breach is not eligible for compensation as per these provisions, the customer’s liability shall be determined as per the bank’s policy. It also said loss arising from any unauthorised transaction occurring after reporting of the fraudulent electronic banking transaction by a customer shall be borne by the bank.
The proposed compensation mechanism will be in force for one year from the effective date of these guidelines. The guidelines would be reviewed on the basis of the experience gained with an objective of enhancing the share of the banks and reducing or eliminating the share of RBI in the compensation paid to the victims, the draft said.
The RBI has sought feedback on the draft by April 6.