ForumIAS LATEST
- SFG FRC 2027 | Program starts from 19th Dec. 2026 | Admissions open for Entrance Test Click Here to know more →
- Prelims Test Series (PTS) for Prelims 2027 starts 11th Oct. 2026 Click Here to know more →
- [Pre-order] Ethics Redbook 3rd Edition: Delivery starts from 10th October onwards Click Here to Read More →
- 21 Sept. | GS Advance Program (GSAP) for UPSC 2027 Mains starts from 11th Oct. Click Here to Read More →
News: The Reserve Bank of India introduced a revised fraud compensation mechanism for small-value digital payment frauds, effective from January 1, 2027.
About RBI’s New Fraud Compensation Mechanism
- RBI’s New Fraud Compensation Mechanism is a revised framework that provides compensation to eligible victims of fraudulent electronic banking transactions involving losses up to ₹50,000.
- The new framework builds on the RBI’s Limited Liability Framework (2017, updated), which established that customers would have zero or limited liability if they reported unauthorized electronic banking transactions promptly.
- Common Types of Digital Fraud: SIM swapping, phishing, vishing (voice call fraud), OTP theft, fake UPI handles, QR code scams, and AI-driven deepfake frauds are common forms of digital payment fraud.
- Effective from: The revised framework will apply to electronic banking transactions undertaken on or after January 1, 2027.
- Aim: The framework aims to limit customer liability, strengthen customer protection, and improve banks’ responsibility for fraud prevention and grievance redressal.
- Key Features:
- Compensation: A bona fide victim can receive 85% of the net loss or ₹25,000, whichever is lower, once during the lifetime for eligible fraud cases.
- Eligibility: The customer must report the fraud to both the bank and the National Cyber Crime Reporting Portal or Helpline 1930 within five calendar days.
- Zero Liability: Customers will have zero liability if the fraud results from bank negligence or a third-party breach reported within five days.
- Burden of Proof: Banks must establish customer negligence before rejecting any compensation claim.
- Bank Obligations: Banks must provide 24×7 complaint channels, instant SMS alerts for transactions above ₹500, email alerts where available, and direct complaint links on websites and mobile applications.
- Complaint Resolution: Banks must resolve complaints within 45 days for domestic frauds and 60 days for cross-border frauds.
