RBI Proposes Compensation Framework for Small-Value Digital Banking Frauds from July 2026

The Reserve Bank of India (RBI) has proposed draft guidelines effective July 1, 2026, to compensate customers for small-value digital banking frauds up to Rs 50,000. Eligible victims may receive 85% of the net loss or Rs 25,000, whichever is lower, once in their lifetime. Compensation will be shared between RBI, the customer's bank, and the beneficiary bank. Customers have zero liability if fraud results from bank negligence or third-party breaches, with claims requiring reporting within five days. The framework aims to enhance customer protection and will be reviewed after one year.