RBI finalises digital banking fraud protection rules; introduces shadow reversal, extends relief to sole proprietors

Mumbai: Victims of digital payment fraud involving losses of up to Rs 50,000 will be eligible to receive compensation of up to Rs 25,000 from their banks once in their lifetime under final guidelines issued by the Reserve Bank of India.

Under the regulator’s directions on limiting liability of customers in unauthorised digital transactions, which will come into effect on January 1, 2027, the compensation will be funded jointly, with 65% contributed by the RBI, 10% by the victim’s bank and 10% by the beneficiary bank — the bank where the fraudster first received the funds.