People losing smaller amounts in a UPI, card or net-banking scam may soon have a financial safety net. Under final customer-protection directions reported on June 24, 2026, eligible victims of digital fraud involving a gross loss of up to ₹50,000 can receive 85% of their net loss or ₹25,000, whichever is lower.
The RBI Online Fraud Compensation Rule will take effect on January 1, 2027, six months later than proposed in the March draft. It is a once-in-a-lifetime benefit, not an automatic refund after every scam. Victims must report the transaction to both their bank and the National Cyber Crime Reporting Portal or helpline 1930 within five calendar days.
How Will The 85% Refund And ₹25,000 Limit Work?
The calculation is simple, although the cap changes the payout for larger losses. Someone with an eligible net loss of ₹10,000 may receive ₹8,500. On a ₹20,000 loss, compensation may reach ₹17,000. However, 85% of ₹40,000 is ₹34,000, so the payout would stop at ₹25,000.
The scheme applies only when the gross fraud loss does not exceed ₹50,000. It covers unintended digital fraud, including cases where a customer was manipulated into transferring money or disclosing credentials such as an OTP.
This point is important because many current scams make victims complete the payment themselves. Fake police officers, courier representatives, investment advisers, bank executives and task-job operators often persuade people to authorise UPI or net-banking transfers.
The compensation does not replace a full reversal where the customer already has zero liability because of bank negligence or another protected situation. It also excludes normal disputes involving defective products, undelivered services and paper cheques.
Reports on the final directions state that RBI will bear 65% of the compensation. The victim’s bank and the bank where the fraudster first received the money will contribute 10% each. The remaining 15% stays with the customer because the payment covers only 85% of the eligible loss.
Who Can Claim Under The RBI Online Fraud Compensation Rule?
The final framework covers individual bank customers and sole proprietors. Cross-border digital frauds have also been included, although the funding arrangement changes when the beneficiary bank is outside India.
A claimant will generally need to meet these conditions:
- The gross digital fraud loss must be ₹50,000 or less.
- The loss must be unintended and the claim must be genuine.
- The bank must be informed within five calendar days.
- A complaint must also be filed through 1930 or the cybercrime portal.
- The cybercrime complaint copy must be submitted to the bank.
- The customer must not have used this lifetime benefit earlier.
- False, duplicate or disproved compensation claims may have to be repaid.
The five-day deadline could become the biggest eligibility test. Victims should not wait because a scammer promises to return the money after “verification.” Such delay tactics regularly appear in digital-arrest, fake parcel, KYC, remote-access app, investment and online job scams.
What Should A Victim Do Immediately After Losing Money?
First, call 1930 and report the transaction through the official National Cyber Crime Reporting Portal. Next, inform the bank using its verified helpline, mobile application, branch or fraud-reporting facility.
Share the transaction ID, payment amount, date, beneficiary details, screenshots, phone numbers and messages linked to the scam. Do not delete WhatsApp chats, SMS alerts, emails or call records. These details may help the bank and police trace the first recipient account.
Victims should also:
- Freeze affected debit or credit cards.
- Change mobile-banking and email passwords.
- Remove unknown remote-access applications.
- Block compromised UPI IDs or banking access.
- Raise a dispute through the payment application.
- Keep the bank and cybercrime complaint numbers safely.
Submitting a complaint through a UPI application alone may not satisfy the new requirement. The incident must be reported separately to the concerned bank and cybercrime authorities.
The final directions reportedly require banks to pay eligible compensation within five calendar days after receiving the application. Banks will have up to 45 calendar days to resolve domestic fraud complaints and 60 calendar days for cross-border cases.
What Is Shadow Reversal For Credit Cards?
Credit-card customers receive another protection called shadow reversal. After a fraudulent credit-card payment is reported, the bank must provisionally credit the disputed amount within five calendar days, even while the investigation continues.
Banks will also have to send immediate SMS alerts for electronic banking transactions above ₹500. The earlier alert threshold was ₹5,000.
An official ET NOW news video explained the proposed ₹50,000 threshold, 85% formula and five-day reporting requirement. The Instagram news post can be viewed here.
FAQs
1. When Will The New Online Fraud Refund Rule Start?
The final RBI-backed compensation framework is scheduled to begin across eligible banks on January 1, 2027.
2. Will Every Fraud Victim Receive ₹25,000?
No, compensation equals 85% of eligible net loss or ₹25,000, whichever amount is lower.
3. What Is The Maximum Fraud Loss Covered?
The once-in-a-lifetime relief applies when the gross digital fraud loss remains within the ₹50,000 limit.
4. Where Should Victims Report Online Financial Fraud?
Report immediately to the concerned bank and National Cyber Crime Helpline 1930 or official portal.
5. Can OTP-Sharing Victims Still Receive Compensation?
Yes, genuine unintended fraud may qualify when victims were tricked into sharing their confidential OTP.
