RBI Announces ₹25,000 Relief for Online Fraud Victims

In a major relief for digital banking users, the Reserve Bank of India (RBI) has announced a new compensation policy for victims of online financial fraud. Under the new framework, eligible customers who fall victim to digital payment fraud may receive compensation of up to ₹25,000, provided they meet the conditions laid down by the central bank.

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The notification was issued by the RBI on June 24, 2026, and the new rules will come into effect from January 1, 2027.

The move comes amid a sharp rise in online banking fraud, UPI scams and digital payment-related cybercrime across the country.

Which Transactions Are Covered?

The new compensation framework will apply to most commercial banks. However, Small Finance Banks, Payment Banks, Regional Rural Banks and Local Area Banks have been kept outside the scope of these rules.

The policy covers the following digital transactions:

• UPI transactions
• Net Banking
• Mobile Banking
• Debit Card transactions
• Credit Card transactions
• Online card payments
• Tap-and-Pay and Swipe card transactions

Who Will Be Held Responsible?

The RBI has clarified that liability will be determined on a case-by-case basis. Banks will not be allowed to reject claims simply by blaming the customer. They must provide adequate evidence before denying compensation.

Three Key Conditions Laid Down by RBI

1. If the Bank Is at Fault

If the financial loss occurs due to a security lapse, technical failure or the bank’s failure to issue fraud alerts, the customer will be entitled to full reimbursement.

2. If a Third Party Is Responsible

If the fraud is caused by a payment app, payment gateway or telecom service provider, and the customer reports the incident to the bank within five days, they may be eligible for full compensation.

3. If the Customer Is Partly Responsible

Even if the customer accidentally shared an OTP, clicked on a phishing link or downloaded a suspicious application, compensation may still be available in certain situations. However, the loss must be limited and the fraud must be reported immediately.

How Much Compensation Will Customers Receive?

According to the RBI’s new rules, a customer can claim compensation only once in their lifetime.

The compensation will be the lower of ₹25,000 or 85% of the financial loss.

For example:

• If a customer loses ₹50,000 in an online fraud, the maximum compensation payable will be ₹25,000.
• If the same customer becomes a victim of fraud again in the future, they will not be eligible to claim compensation under this scheme a second time.

Who Will Bear the Compensation Cost?

For fraud losses of up to ₹29,412:

• RBI – 65%
• Customer’s Bank – 10%
• Beneficiary Bank – 10%
• The remaining share will be determined as per the prescribed framework.

For fraud losses between ₹29,412 and ₹50,000:

• RBI – ₹19,118
• Customer’s Bank – ₹2,941
• Beneficiary Bank – ₹2,941
• Remaining amount as per the applicable compensation mechanism.

What Should Customers Do?

Customers who become victims of online fraud should immediately inform their bank and register an official complaint. Reporting the incident within five days will significantly improve the chances of receiving compensation under the RBI’s new policy.

However, compensation will be granted only after verifying the facts of each case and only if the claimant satisfies the eligibility criteria prescribed by the RBI.

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