RBI Introduces Stronger Protection Against Digital Banking Fraud

The Reserve Bank of India (RBI) has announced revised customer protection guidelines aimed at safeguarding bank customers from credit card and digital banking fraud. Under the new rules, banks must provide a shadow reversal or provisional credit for disputed credit card transactions within five days of receiving a fraud complaint. The revised framework, which comes into effect from January 1, 2027, limits customer liability in unauthorised digital transactions and strengthens consumer rights.

The RBI clarified that if fraud occurs due to a bank's negligence, customers will bear no financial liability and the full amount must be credited back to their account. If a third-party cyberattack is reported within five calendar days, customers will also not be held responsible. Banks must restore the disputed amount with the original transaction date to prevent interest loss. Additionally, all banks must send free SMS alerts for every electronic transaction of ₹500 or above, while no charges can be levied on customers for these notifications. Compensation provisions have also been introduced for eligible first-time victims of digital fraud.