Small fraud: RBI for relief within 5 days

Bank customers losing up to %50,000 in digital frauds may soon get relief, with the Reserve Bank of India (RBI) proposing compensation of up to %25,000 as a onetime measure, even if the loss occurred due to the customer’s negligence, provided the complaint is lodged within five days of being defrauded.

- SUBRATA PANDA

In draft norms issued on Friday, the regulator said only bona fide victims involving individuals would be compensated by banks within five days of receiving the complaint.

‘The compensation will be shared between the Reserve Bank of India (RBI) and banks, with the central bank bearing the bulk of the payout in the range of 65-76 per cent.

During the monetary policy press meet last month, RBI Governor Sanjay Malhotra had said the customer will be compensated up to 25,000 as a onetime measure, “no question asked”.

The move comes against the backdrop of a rising number of digital fraud cases, with customers increasingly losing hard-earned savings to such incidents. More than two-thirds of fraud cases are of small value, though they account for about 15 per cent of the total fraud value.

The draft on limiting customer liability in fraudulent digital transactions proposes that the norms will come into effect from July 1, 2026.

"The digital payments and banking landscape has evolved considerably since the issuance of the existing instructions on limiting customer liability in unauthorised electronic banking transactions in 2017," the RBI said. The draft makes it mandatory for banks to send instant SMS alerts to customers for all electronic banking transactions of value more than ₹500.