RBI Boosts Digital Transaction Security: New Rules Offer Wider Customer Safeguards

• RBI proposes draft amendment for digital transaction liability, enhancing customer safeguards and introducing a compensation framework for small-value fraud.
• New rules, effective July 1, 2026, expand "authorized transactions" to include scam/fraud, placing burden of proof on banks for customer liability.
• Customers get zero liability for bank negligence or third-party breaches reported within 5 days; banks must provide instant SMS alerts for transactions > ₹500 and 24x7 fraud reporting.
• Compensation for small-value fraud (up to ₹50,000): 85% of net loss or ₹25,000, whichever is lower, available once per individual.
• RBI contributes significantly to compensation, with banks bearing a smaller portion; banks must pay within 5 days and seek quarterly reimbursement.