RBI Proposes New Framework for Digital Banking Fraud Protection

Press Release: 2025-2026/2224; Dated: 06.03.2026

The Reserve Bank of India (RBI) has issued draft amendment directions proposing revisions to the framework governing customer liability in unauthorised electronic banking transactions.

The proposed amendments aim to expand the framework to cover a wider range of digital banking frauds, ensure faster complaint resolution by banks, and introduce mechanisms to strengthen customer protection.

1. Expanded Coverage of Digital Banking Frauds

The revised framework proposes to broaden the scope of the existing guidelines so that more categories of digital payment and electronic banking frauds fall within the customer liability framework. This step is intended to strengthen consumer protection in the rapidly evolving digital banking ecosystem.

2. Burden of Proof on Banks

Under the draft directions, in cases involving complaints of fraudulent electronic banking transactions, the burden of proving customer liability will lie with the bank.

This provision is intended to ensure fair treatment of customers and place responsibility on banks to establish whether a customer was responsible for the disputed transaction.

3. Mandatory SMS Alerts for Transactions

The draft directions also propose enhanced transaction alert requirements:

• Banks must send instant SMS alerts for all electronic banking transactions exceeding ₹500.
• For transactions of ₹500 or less, banks may send instant SMS alerts in accordance with their internal policies.

These alerts aim to help customers quickly identify and report unauthorised transactions.

4. Complaint Registration and Acknowledgement

Banks will be required to ensure that when a customer reports a fraudulent electronic banking transaction:

• The report is automatically registered as a complaint in the bank’s system.
• The bank sends an immediate acknowledgement to the customer.
• The acknowledgement must include the complaint number and the date and time of receipt of the complaint.

This requirement is intended to improve transparency and tracking of complaints.

5. Temporary Compensation for Small-Value Frauds

The draft framework also proposes a temporary compensation mechanism for small-value frauds, aimed at providing faster interim relief to customers while investigations are ongoing.

6. Applicability

The proposed directions will apply to all categories of banks, ensuring uniform standards across the banking sector.

7. Invitation for Public Comments

RBI has invited public comments and stakeholder feedback on the draft directions. Comments may be submitted until 6 April 2026.

8. Objective of the Proposal

The proposed amendments aim to:

• Strengthen customer protection in digital banking transactions
• Improve accountability of banks in fraud resolution
• Enhance transparency and responsiveness in complaint handling
• Address the growing risks associated with digital financial services.

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