RBI’s Digital Scam Compensation Scheme: Customers To Get Up To ₹25,000 Relief

The Reserve Bank of India (RBI) has taken a significant step towards protecting customers from the rising menace of digital frauds by proposing a structured compensation framework for small-value unauthorised electronic banking transactions.

Under the draft guidelines issued in March 2026 (expected to be implemented from July 1, 2026), customers who suffer genuine losses due to digital scams — such as UPI frauds, card cloning, or net banking breaches — can now get partial compensation. The scheme covers frauds up to ₹50,000, with eligible customers receiving up to 85% of the net loss or ₹25,000, whichever is lower. This compensation is available once in a customer’s lifetime.

The proposed sharing mechanism is unique: the RBI will bear around 65% of the compensation amount, while the customer’s bank and the beneficiary bank will cover the remaining portion. This model aims to reduce the full burden on individual banks while encouraging faster resolution of complaints.

To be eligible for compensation, customers must report the fraudulent transaction within five days to both their bank and the National Cyber Crime Reporting Portal (or 1930 helpline). Prompt reporting and cooperation during the investigation are mandatory. The guidelines also emphasise zero liability for customers in cases where the bank is found negligent or where third-party breaches occur despite the customer following due diligence.

This initiative comes in response to the sharp surge in digital fraud cases across India. With the explosive growth of UPI and online payments, millions of users, especially senior citizens and first-time digital users, have fallen victim to phishing, vishing, and SIM swap frauds. Many lose small to medium amounts that are often not recovered through traditional channels.

Banking industry experts have welcomed the move, calling it a customer-friendly step that will boost confidence in digital payments. However, some have cautioned that the ₹25,000 cap may need revision in the future as average fraud amounts rise. The guidelines are currently open for stakeholder feedback before final notification.

The RBI has also strengthened other measures, including mandating enhanced fraud monitoring systems, AI-based analytics, and stricter controls on mule accounts. The new compensation scheme is expected to be a game-changer in balancing customer protection with the promotion of secure digital transactions in India.