New Delhi: Amid the rapid rise in digital payments and increasing cyber fraud cases, the Reserve Bank of India (RBI) has proposed new rules to strengthen customer protection. Under the proposed framework, victims of small digital fraud cases may receive up to 85% compensation, provided they report the incident within the specified time.
According to sources, the new framework will update existing rules related to customer liability in electronic banking transactions. If finalized, the proposal may come into effect from July 1, 2026.
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The aim of the proposal is to ensure that the entire burden of digital fraud does not fall on customers alone and that the banking system shares responsibility.
Most digital banking channels will be covered
The proposed rules will cover most digital banking modes, including UPI payments, internet banking, mobile banking apps, debit and credit card transactions, and ATM transactions.
Banks will also be required to respond more quickly to complaints about unauthorized transactions. Regulators believe faster investigations and a time-bound process will help victims receive relief sooner and reduce financial losses caused by fraud.
However, the proposal will mainly apply to commercial banks, while small finance banks and payment banks may currently remain outside its scope.
Compensation scheme for small fraud cases
RBI has proposed a special compensation scheme for smaller digital fraud cases. Under this plan, if a customer loses less than ₹50,000 due to fraud, they may receive compensation of up to ₹25,000.
The proposal suggests covering up to 85% of the total loss. Of this, about 65% would be borne by the central bank, while the remaining 20% would be shared between the customer’s bank and the beneficiary bank.
For example, if a person loses ₹20,000 in a digital fraud, they could receive approximately ₹17,000 back. If the loss is ₹40,000, compensation would still be capped at ₹25,000.
Timely complaint is mandatory
To benefit from this scheme, customers must report the fraud within five days of discovering it. Complaints can be registered through the national cybercrime helpline 1930 or the online portal cybercrime.gov.in.
Victims must also inform their bank immediately. If the complaint is filed after the specified period, receiving compensation may become difficult.
Why the rules are being updated
With the rapid expansion of digital banking, cyber fraud cases have also been rising steadily. Many victims struggle for long periods to recover their money. Regulators believe that previous rules placed relatively higher responsibility on customers.
Under the new proposal, banks will also be encouraged to develop stronger fraud detection systems and monitoring mechanisms to identify suspicious transactions at an early stage.
According to RBI data, nearly 65% of digital fraud cases in India involve amounts below ₹50,000, which is why the new proposal focuses particularly on small-value fraud cases.
The regulator has invited public feedback and suggestions until April 6, 2026. Experts believe that if implemented, the framework could strengthen trust in India’s digital payment ecosystem and significantly reduce financial losses caused by cyber fraud.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
