RBI Proposes Revised Compensation Norms for Online Banking Fraud Victims

The RBI's proposal aims to reduce the financial burden on genuine victims while encouraging people to report fraud immediately

If you lose money in an online banking fraud, you may soon get partial compensation from your bank. The Reserve Bank of India (RBI) has released draft rules under 'Review of Framework of Limiting Customer Liability in Digital Transactions' that introduce a compensation mechanism for genuine victims of small-value fraudulent electronic banking transactions.

The proposal aims to provide financial relief to customers while encouraging them to report fraud quickly. If notified, the new rules will apply to electronic banking transactions carried out on or after July 1, 2026. The compensation scheme will cover fraudulent transactions that occur within one year of the date the directions become effective.

Under the draft rules, an individual who loses up to Rs 50,000 in a fraudulent electronic banking transaction can receive compensation from the bank

The Reserve Bank of India (Commercial Banks-Responsible Business Conduct) Third Amendment Directions, 2026, said, "A bona fide victim, being an individual person and having lodged a complaint involving gross loss of an amount up to Rs 50,000 on account of fraudulent electronic banking transaction(s) shall be compensated 85 percent of the net loss amount (calculated after reducing recoveries made, whether before or after paying the compensation, from the gross loss amount), or Rs 25,000, whichever is less, once during his/her lifetime, subject to the conditions.