Online fraud victims liable to ₹25,000 compensation: RBI

Imagine checking your phone and finding a message that ₹20,000 has been deducted from your bank account, even though you never made the payment. Until now, getting money back after falling victim to an online scam was often difficult, and banks were not always able to help. To give customers better protection against digital fraud, the Reserve Bank of India (RBI) has announced a new compensation rule. The notification was issued on June 24, 2026, and it will apply to electronic banking transactions made on or after January 1, 2027.

Which transactions are covered?

The new rule will apply to all commercial banks. However, it will not cover small finance banks, payment banks, regional rural banks, or local area banks. It includes almost every digital payment method used today, such as UPI, net banking, mobile banking, and debit or credit card payments, whether made by swiping, tapping, or entering card details online.

When will customers get a refund?

The RBI has said that banks cannot simply blame the customer whenever an online fraud takes place. If a bank claims that the customer was negligent, it will have to prove it. The new rule explains three different situations in which compensation will be decided.

If the bank is responsible: If the fraud happens because of a security lapse, a technical glitch, or the bank fails to send a transaction alert, the customer will receive a full refund. This will apply whether the customer reports the fraud immediately or later.

If a third party is responsible: Customers will also get a full refund if the fraud is caused by a payment app, payment gateway, or telecom service provider. However, the incident must be reported to the bank within five calendar days. If the complaint is made after that, the bank will decide the case according to its internal policy.

If the customer makes a mistake: The RBI has also provided relief in cases where customers accidentally click on a phishing link or share their OTP. If the loss is not very high and the customer reports the fraud quickly, compensation may still be available under this rule.

Who can claim compensation?

The RBI has laid down a few conditions for this scheme. One of the biggest conditions is that a person can claim this benefit only once in their lifetime. If the same person becomes a victim of online fraud again in the future, they will not be eligible for compensation under this scheme.

The maximum compensation will be ₹25,000 or 85% of the total loss, whichever is lower. For instance, if a person loses ₹50,000 in an online scam, 85% of the amount works out to ₹42,500. However, because the scheme has a maximum compensation limit of ₹25,000, the customer will receive only ₹25,000.

How can customers claim the benefit?

If the fraud happens without any fault of the customer, it must be reported within five calendar days. A complaint can be filed through the National Cyber Crime Reporting Portal, the cybercrime helpline number 1930, or directly with the concerned bank. After receiving the complaint, the bank must immediately take steps to stop any further unauthorized transactions from the customer’s account.

How will the compensation be shared?

The compensation will be shared among different organisations. Out of the 85% compensation payable to the customer, the RBI will bear 65%, while the customer’s bank will contribute 10% and the beneficiary bank, where the fraudulently transferred money was credited, will bear the remaining 10%. If any part of the stolen money is recovered later, the compensation will be calculated only after deducting the recovered amount.