RBI digital fraud rules from January 1, 2027: Will you get 85% of your money back after an online scam?
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RBI digital fraud compensation rules from January 1, 2027: What’s new?
In a move set to offer some relief to digital fraud victims, the Reserve Bank of India has mandated a significant change in compensation. Starting January 1, 2027, online scam victims can get up to 85% of the net loss amount or Rs 25,000, whichever is lower, as compensation.
However, this RBI rule applies to small-value fraudulent electronic banking transactions (EBTs).
However, this RBI rule applies to small-value fraudulent electronic banking transactions (EBTs).
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What kind of transactions will be covered?
RBI digital fraud compensation rules apply to scams and frauds caused by EBTs, involving a gross loss of up to Rs 50,000. To put it in one line, if you lose a gross amount of up to Rs 50,000 in online fraud, you will be able to claim compensation.
In this case, EBTs would include transactions like point of sale (POS) transfers, automated teller machine transactions, direct deposits or withdrawal of funds, transfers initiated by telephone, internet and card payment.
In this case, EBTs would include transactions like point of sale (POS) transfers, automated teller machine transactions, direct deposits or withdrawal of funds, transfers initiated by telephone, internet and card payment.
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What if the loss happens due to the bank’s error?
In such cases, the customer will have zero liability, which means their transaction will be reversed even if they do not report it.
Worth mentioning here is that the compensation will be payable for any losses incurred on fraudulent transactions occurring up to one year from the effective date of these directions i.e. up to January 1, 2028.
Worth mentioning here is that the compensation will be payable for any losses incurred on fraudulent transactions occurring up to one year from the effective date of these directions i.e. up to January 1, 2028.
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Lost money in online scam? Know how much compensation you will get
If you lodge a complaint for the fraudulent transaction within 5 calendar days, you shall be compensated the lesser of 85% of the net loss amount or Rs 25,000.
Let’s assume someone was defrauded of 50,000 via an EBT. In this case, 85% of 50,000 comes out to be Rs 42,500. So, the victim will get Rs 25,000 as compensation, since that is the lower amount.
However, it must be noted that the 85% compensation is calculated after deducting recoveries made, whether before or after paying the compensation, from the gross loss.
Let’s assume someone was defrauded of 50,000 via an EBT. In this case, 85% of 50,000 comes out to be Rs 42,500. So, the victim will get Rs 25,000 as compensation, since that is the lower amount.
However, it must be noted that the 85% compensation is calculated after deducting recoveries made, whether before or after paying the compensation, from the gross loss.
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RBI’s digital fraud compensation calculations
Let’s understand it better with the following illustrations:
Example 1: Amount reported lost under the complaint: Rs 40,000
Recovery made and credited to customer before compensating: Rs 15,000
Net loss faced by the customer: Rs 40,000-15,000 = Rs 25,000
Compensation for the customer (85% of net loss): Rs 21,250
Example 2: Amount reported lost: Rs 40,000
Compensation paid to the customer: Rs 25,000
Now, support a full recovery i.e. Rs 40,000 is made after compensation is given to the customer. In such a situation, the customer’s bank will recalculate the payable amount on the net loss amount.
It will accordingly make additional payment from the recovered amount after factoring in the excess amount of compensation, if any, paid before the recovery.
In this case, the apportionment of recovery shall be as follows:
To customer: Rs 15,000
To RBI: Rs 19,118
To customer’s bank and beneficiary bank: Rs 2,941 each
Example 1: Amount reported lost under the complaint: Rs 40,000
Recovery made and credited to customer before compensating: Rs 15,000
Net loss faced by the customer: Rs 40,000-15,000 = Rs 25,000
Compensation for the customer (85% of net loss): Rs 21,250
Example 2: Amount reported lost: Rs 40,000
Compensation paid to the customer: Rs 25,000
Now, support a full recovery i.e. Rs 40,000 is made after compensation is given to the customer. In such a situation, the customer’s bank will recalculate the payable amount on the net loss amount.
It will accordingly make additional payment from the recovered amount after factoring in the excess amount of compensation, if any, paid before the recovery.
In this case, the apportionment of recovery shall be as follows:
To customer: Rs 15,000
To RBI: Rs 19,118
To customer’s bank and beneficiary bank: Rs 2,941 each
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What if partial recovery is made after compensation is paid?
Here, the customer’s bank will recalculate the compensation payable on the net loss amount and accordingly make additional payment from the recovered amount after factoring in the excess amount of compensation, if any, paid before the recovery.
Example: Amount reported lost: Rs 40,000
Compensation to the customer: Rs 25,000
Recovery made after compensation is paid: Rs 15,000
Net loss: Rs 25,000
Compensation payable (85% of net loss): Rs 21,250
Additional amount payable: Rs 15,000 + Rs 21,250 – Rs 25,000 = Rs 11,250
Example: Amount reported lost: Rs 40,000
Compensation to the customer: Rs 25,000
Recovery made after compensation is paid: Rs 15,000
Net loss: Rs 25,000
Compensation payable (85% of net loss): Rs 21,250
Additional amount payable: Rs 15,000 + Rs 21,250 – Rs 25,000 = Rs 11,250
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How should customers report fraudulent transactions to banks?
RBI has stated that banks shall advise its customers to report any fraud EBTs to the bank and also lodge a complaint through National Cyber Crime Reporting Portal or National Cyber Crime Helpline (1930) at the earliest.