The Reserve Bank of India (RBI) has revised its framework for unauthorised and fraudulent electronic banking transactions, introducing a compensation mechanism for victims of small-value digital frauds. Under the new rules effective immediately, individual customers who suffer losses up to Rs 50,000 due to digital fraud will be compensated by banks, according to bfsi.economictimes.indiatimes.com.
The overhaul of the Electronic Banking Transactions (EBT) framework mandates banks to reimburse bona fide customers for losses arising from unauthorised transactions up to the Rs 50,000 threshold. The RBI's revised guidelines aim to enhance consumer protection by holding banks accountable for timely compensation. The central bank also outlined procedures for banks to investigate fraud claims and ensure prompt resolution, as detailed on bfsi.economictimes.indiatimes.com.
This move addresses growing concerns over digital payment security amid rising fraud cases in India’s expanding digital economy. By setting a clear compensation limit, the RBI aligns with global practices that protect consumers while encouraging banks to strengthen fraud detection systems. The compensation framework complements other RBI initiatives, such as the AI governance framework for banks, to improve risk management and customer trust in digital financial services, according to bfsi.economictimes.indiatimes.com.
The RBI’s revised EBT framework is part of a broader regulatory push to safeguard digital banking users, with the compensation mechanism expected to cover millions of small-value fraud cases annually. The central bank’s announcement on June 24 marks a significant step in consumer protection, reinforcing the accountability of banks in the digital payments ecosystem, as reported by bfsi.economictimes.indiatimes.com.