RBI digital fraud compensation rules 2027: How to get your money back lost in online fraud, and everything else you need to know

The Reserve Bank of India has notified a new compensation mechanism for people who lose money to digital banking fraud. Under the framework, victims of fraudulent electronic banking transactions can recover up to Rs 25,000, in a move aimed at limiting customer liability and offering relief after small-value scams.

The rules take effect on January 1, 2027, and will run as a one-year pilot.The framework is straightforward. For a loss of up to Rs 50,000 in a fraudulent transaction, a victim can claim 85% of the amount or Rs 25,000, whichever is lower. The benefit can be availed once in a lifetime, making it relevant mainly to first-time victims. The directions also shift the burden of proof onto the bank, which must now establish that the customer was at fault.

Why the first five days matter most in RBI’s digital fraud compensation rules

To be eligible, a victim must report the fraud within five calendar days of noticing it, both to the bank and on the National Cyber Crime Reporting Portal or the helpline, 1930. Complaints filed after this window do not qualify for compensation. Once a complaint is lodged, the bank is required to act promptly to prevent further unauthorised transactions, and to resolve the case within 45 days for domestic fraud and 60 days for cross-border cases.

Who pays you: bank or RBI

The central bank bears the larger share of the cost. For a loss below Rs 29,412, where 85% is compensated, the RBI contributes 65%, the customer's bank 10%, and the beneficiary bank 10%. For losses between Rs 29,412 and Rs 50,000, where Rs 25,000 is paid, the RBI contributes Rs 19,118 and the two banks pay Rs 2,941 each. In cross-border frauds, the customer's bank carries a higher portion. The structure ties a bank's liability to lapses in its own systems.

What else you need know about RBI’s digital fraud compensation rules 2027

Victims can recover more than Rs 25,000 in a single case. If the bank later recovers part of the stolen amount, that sum is passed on to the customer over and above the compensation, valued to the original date so there is no loss of interest. In credit card fraud, the bank must provide a "shadow reversal" of the disputed amount within five days while the investigation continues. The rules apply to frauds of up to Rs 50,000; cases above that limit will continue to be handled under existing procedures.The framework amends the RBI's 2017 circular on limiting customer liability in unauthorised electronic banking transactions, which had covered only transactions not authorised by the customer. The pilot may be extended after its first year.