Reserve Bank of India issues draft amendments to expand customer liability protections and introduce compensation for small-value fraudulent electronic banking transactions

The Reserve Bank of India published draft Amendment Directions for public comment to update its framework on limiting customers’ liability in digital transactions. The proposals would expand the existing instructions beyond unauthorised electronic banking transactions to cover other categories of fraudulent electronic banking transactions, reduce the time banks take to process related complaints, and add a compensation mechanism for small-value fraudulent electronic banking transactions. The draft amendments would be made through updates to the RBI’s Responsible Business Conduct directions across multiple categories of banks, including commercial banks, small finance banks, payments banks, local area banks, regional rural banks, and urban and rural co-operative banks. The proposed compensation mechanism would be in force for one year from the effective date of the directions and would then be reviewed with the objective of increasing banks’ share and reducing or eliminating the RBI’s share of compensation paid to victims. Feedback from regulated entities, the public and other stakeholders is requested by April 6, 2026 via the RBI’s Connect 2 Regulate portal or by email with the prescribed subject line.