The Reserve Bank of India (RBI) has issued Amendment Directions on ‘Review of Framework of Limiting Customer Liability in Digital Transactions. This basically offers revised customer protection norms for digital banking transactions, widening the scope of existing rules to cover a broader range of fraudulent electronic transactions and introducing a compensation mechanism for victims of small-value digital frauds.

RBI has expanded the framework beyond unauthorised transactions to include a broader category of "fraudulent electronic banking transactions" (EBTs). The draft Amendment Directions inter alia proposed to enhance the scope of existing instructions on limiting liability of customers in unauthorised electronic banking transactions to cover other categories of fraudulent electronic banking transactions. The norms also cover both card-present and card-not-present transactions.

RBI has also introduced a compensation mechanism for small-value frauds. Individual customers, including sole proprietors, who suffer losses of up to Rs 50,000 due to fraudulent electronic transactions may receive compensation amounting to 85% of the net loss or Rs 25,000, whichever is lower. To qualify, customers must report the fraud both to their bank and through the National Cyber Crime Reporting Portal or Cyber Crime Helpline 1930 within five calendar days of the incident.

Banks will be required to send instant SMS alerts for all electronic banking transactions above Rs 500. The RBI has also directed banks to complete investigations and communicate outcomes within 45 days for domestic fraud complaints and 60 days for cross-border cases. In the case of fraudulent credit-card transactions, banks must provide a "shadow reversal" of the disputed amount within five days of receiving a complaint. The revised directions have been issued for commercial banks, small finance banks, payments banks, local area banks, regional rural banks and co-operative banks. The new framework will come into effect from January 1, 2027.